KCK - KCK Industries

📊 NSE: KCK 🏢 Food - Processing - Indian 📅 Last Updated: 12/14/2025 8:52

💰 Financial Performance

Revenue Growth by Segment

The company transitioned from trading chemicals and yarn to rice milling in FY22. Total revenue from operations declined by 54.1% YoY, falling from INR 76.70 Cr in FY24 to INR 35.21 Cr in FY25. For the half-year ended September 30, 2025, revenue was INR 8.11 Cr, a 44.1% decrease compared to INR 14.52 Cr in the same period the previous year.

Geographic Revenue Split

Revenue is primarily generated from India, with operations centered in Punjab (Sangrur milling facility) and Chandigarh (Registered Office). Specific regional percentage splits are not disclosed, but the business is highly concentrated in the North Indian agricultural belt.

Profitability Margins

Net Profit Margin (NPM) stood at 2.07% in FY25 (INR 0.73 Cr profit on INR 35.21 Cr revenue), down slightly from 2.09% in FY24. However, margins compressed significantly in H1 FY26 to 0.37% (INR 0.03 Cr profit on INR 8.11 Cr revenue) due to lower scale and fixed cost pressures.

EBITDA Margin

Operating margins were 4.25% in FY23 and are estimated to sustain above 4% over the medium term. In FY24, the operating profit margin was reported at 7.1%, which improved to 10.74% in H1 FY25, though absolute operating profit remains low due to declining revenue volumes.

Capital Expenditure

The company invested INR 0.37 Cr in fixed assets during FY25. As of September 30, 2025, net tangible assets stood at INR 0.90 Cr, a significant reduction from INR 7.24 Cr in March 2025, suggesting potential asset reclassification or disposals.

Credit Rating & Borrowing

The company's credit rating was migrated to 'CRISIL BB/Stable (ISSUER NOT COOPERATING)' in December 2024 due to a lack of management interaction. Long-term borrowings stood at INR 2.52 Cr as of September 2025, down from INR 3.27 Cr in March 2025. Bank limit utilization averaged 70.8% through August 2023.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Paddy and Basmati Rice for the milling division, and Dyes, Auxiliaries, and Speciality Chemicals for the trading division. Raw material costs are highly volatile, linked to international commodity prices and agro-climatic conditions.

Import Sources

Raw materials are primarily sourced from the domestic Indian market, specifically the state of Punjab for rice milling operations to minimize logistics costs and ensure freshness.

Key Suppliers

Not specifically named in the documents; however, the company maintains relationships with local farmers and aggregators in the Sangrur region for paddy procurement.

Capacity Expansion

The current installed capacity for the rice milling facility in Sangrur, Punjab, is 12 tonnes per hour. There are no specific documented plans for physical capacity expansion, though the company is raising INR 100 Cr which may be used for operational scaling.

Raw Material Costs

Cost of purchases was INR 19.68 Cr in FY25, representing 55.9% of revenue. This is a sharp decrease from INR 65.78 Cr (85.8% of revenue) in FY24, reflecting the shift in business mix and inventory utilization strategies.

Manufacturing Efficiency

Current capacity utilization is 7 tonnes per hour against an installed capacity of 12 tonnes per hour, representing a 58.3% utilization rate. Improving this rate is critical for absorbing fixed depreciation costs of INR 0.08 Cr per half-year.

Logistics & Distribution

Distribution costs are part of other expenses; the company utilizes its proximity to the Punjab rice belt to manage inward logistics costs.

📈 Strategic Growth

Expected Growth Rate

14%

Growth Strategy

The company plans to raise up to INR 100 Cr through a rights issue or preferential allotment to fund expansion. The strategy involves leveraging its expertise in chemical trading to expand its range of speciality chemicals while scaling the rice milling business to reach its 12 TPH capacity.

Products & Services

Processed Basmati Rice, cotton yarn, reactive acid dyes, direct dyes, textile auxiliaries, and speciality chemicals.

Brand Portfolio

KCK Industries; KCK Sales.

New Products/Services

Expansion from basic dyes to speciality chemicals and auxiliaries is expected to contribute to higher margin revenue streams, though specific percentage contributions are not yet quantified.

Market Expansion

The company is targeting a larger share of the Indian chemical and rice markets by transitioning from a pure trading model to a manufacturing-led model.

Market Share & Ranking

Not disclosed; the company operates in the highly fragmented SME sector and is listed on the NSE SME platform.

🌍 External Factors

Industry Trends

The Indian chemical industry is expected to grow at 14% CAGR over the next decade. The industry is maturing from a regulated environment to a high-growth sector driven by rising per-capita income and R&D support.

Competitive Landscape

Faces intense competition from both organized and unorganized rice millers in Punjab and Haryana, as well as established chemical traders.

Competitive Moat

The moat is based on the promoters' extensive 10-year experience across diversified industries and established supplier relationships in the Punjab region. This provides a localized cost advantage in procurement.

Macro Economic Sensitivity

Highly sensitive to agricultural GDP and monsoon performance. A 1% decline in agricultural output in Punjab significantly impacts raw material procurement costs.

Consumer Behavior

Rising demand for branded and quality-processed Basmati rice is driving the shift toward modern milling facilities like KCK's 12 TPH plant.

Geopolitical Risks

International trade barriers or export bans on Basmati rice would severely impact the revenue potential of the milling division.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Essential Commodities Act (for rice) and safety standards for chemical handling. Compliance with SEBI (PIT) Regulations is noted with regular trading window closures.

Environmental Compliance

Not disclosed; however, rice milling and chemical trading are subject to state pollution control board norms in Punjab and Chandigarh.

Taxation Policy Impact

The company's effective tax expense for FY25 was INR 0.35 Cr on a pre-tax profit of INR 1.08 Cr, representing an effective tax rate of approximately 32.4%.

Legal Contingencies

A certificate of non-disqualification of directors was issued in 2024, confirming no debarment by SEBI or the Ministry of Corporate Affairs. No specific pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the 'Issuer Not Cooperating' status from CRISIL, which could increase borrowing costs or limit access to credit. This reflects a high information adequacy risk for investors.

Geographic Concentration Risk

High concentration in Punjab for manufacturing; any regional regulatory changes or labor unrest in the Sangrur district would halt 100% of production.