💰 Financial Performance

Revenue Growth by Segment

Standalone revenue for Q2 FY26 was INR 19.72 Cr, representing a 42% YoY decline from INR 34.00 Cr in Q2 FY25. H1 FY26 revenue stood at INR 45.97 Cr, a 6.8% decrease from INR 49.32 Cr in H1 FY25. Segment-wise split is not disclosed in available documents.

Profitability Margins

Profit Before Tax (PBT) for H1 FY26 was INR 2.89 Cr, a 31.8% decrease from INR 4.24 Cr in H1 FY25. Operating margins were approximately 8.5% in FY24 and are expected to improve to 9-10% over the medium term due to a shift in product mix toward higher-margin steel cord beltings.

EBITDA Margin

Operating margins reached 10.4% as of September 2024, driven by high-margin steel cord products. CRISIL expects margins to stabilize between 9-10% over the medium term despite intense competition.

Capital Expenditure

The company has no major debt-funded capital expenditure (capex) plans for the medium term. Net worth is projected to grow to INR 80-86 Cr by March 31, 2026, from INR 76.52 Cr in FY25 through steady accretion to reserves.

Credit Rating & Borrowing

CRISIL upgraded the long-term rating to 'CRISIL BBB-/Stable' from 'CRISIL BB+/Stable' in 2025. CARE Ratings maintains a 'CARE BB-; Stable / CARE A4' rating under the 'ISSUER NOT COOPERATING' category. Interest coverage ratio was 5.50 times in FY25.

⚙️ Operational Drivers

Raw Materials

Steel cords are specifically identified as a critical component for high-margin beltings. Other raw materials typically include rubber and fabric, though not explicitly listed by cost percentage in the documents.

Capacity Expansion

Current installed capacity is not specified in units; however, the company is scaling operations to support a revenue target of INR 125-130 Cr for FY25, up from INR 101.24 Cr in FY25 (Audited).

Raw Material Costs

Cost of materials consumed in H1 FY26 was INR 35.91 Cr, representing 78.1% of total revenue, compared to INR 33.57 Cr (68% of revenue) in H1 FY25.

Manufacturing Efficiency

Capacity utilization is supported by a healthy order book of INR 105 Cr for execution within the current fiscal year.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be achieved through the execution of a current order book worth INR 105 Cr and a pipeline of INR 120 Cr. The strategy focuses on increasing the share of high-margin steel cord beltings and leveraging the company's status as a prominent vendor for government undertakings in the mining and infrastructure sectors.

Products & Services

Conveyor belts, specifically rubber conveyor belts and high-margin steel cord beltings.

Brand Portfolio

Somi Conveyor.

New Products/Services

The company is focusing on the expansion of its steel cord belting product line, which contributed to an improved margin of 10.4% in late 2024.

Market Expansion

The company is targeting growth through increased penetration in government undertakings and infrastructure projects.

🌍 External Factors

Industry Trends

The conveyor belt industry is evolving with a shift toward high-strength steel cord belts. The industry is currently growing, with the company achieving a 21-30% historical CAGR, driven by robust demand from mining and ports.

Competitive Landscape

The industry is characterized by intense competition and volatility in raw material prices, which previously pressured operating margins to around 8.5%.

Competitive Moat

The company's moat is built on the extensive experience of its promoters (the Bhansali group) and its established status as a registered vendor for government entities, which provides a competitive advantage in securing large-scale contracts.

Macro Economic Sensitivity

Highly sensitive to industrial capex cycles and GDP growth, particularly in the mining and infrastructure sectors which drive conveyor belt demand.

Consumer Behavior

End-users are increasingly demanding higher-durability products like steel cord belts to reduce maintenance downtime in heavy industrial applications.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Environment (Protection) Act 1986, the Water (Prevention & Control of Pollution) Act 1974, and the Air (Prevention & Control of Pollution) Act 1981.

Environmental Compliance

The company spent INR 9.00 lakhs on Corporate Social Responsibility (CSR) activities in FY25, exceeding its statutory requirement of INR 8.63 lakhs.

Taxation Policy Impact

The company recorded a current tax liability of INR 0.73 Cr for H1 FY26. The effective tax rate is governed by standard Indian corporate tax laws.

Legal Contingencies

The Secretarial Audit report for FY25 confirmed compliance with the Companies Act 2013 and other applicable laws; no specific pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Key risks include the volatility of raw material prices (impacting 78% of revenue) and the cyclical nature of the mining and infrastructure industries.

Technology Obsolescence Risk

The company is addressing technology shifts by transitioning production focus to steel cord beltings.

Credit & Counterparty Risk

Trade receivables of INR 12.38 Cr represent a significant portion of current assets, though the company maintains an 'Adequate' liquidity profile according to CRISIL.