### **Overview** Sarthak Metals Limited (SML), part of the ₹490+ crore Desraj Bansal Group (DB Group), is a leading Indian manufacturer and exporter of **metallurgical consumables**, with an evolving footprint in **welding consumables** and **biotechnology**. Headquartered in **Bhilai, Chhattisgarh**, the company leverages its strategic location near India’s steel heartland to serve top-tier domestic and international clients. Founded in 1995, SML has transitioned from an industrial gases supplier to a diversified industrial solutions provider, driven by innovation, backward integration, and strategic diversification. Listed on the **BSE SME platform in 2017** and subsequently migrated to **BSE/NSE mainboards in November 2021**, SML is positioning itself for long-term sustainable growth across multiple high-potential sectors. --- ### **Strategic Pillars (Core Business Model)** SML operates on **three strategic pillars**: 1. **Cored Wires & Aluminium Flipping Coils** – Established metallurgical solutions. 2. **Welding Consumables (Flux-Cored Wires)** – High-growth industrial expansion. 3. **Biotechnology (SSF-based Bio-Enzymes & Alternative Energy)** – Future-focused diversification. This multi-engine growth strategy reduces reliance on the cyclical steel industry and enhances long-term resilience, profitability, and shareholder value. --- ## **Business Segments** ### **1. Core Business: Metallurgical Consumables** #### **Cored Wires** - **Annual Capacity**: 10,000 TPA across **four in-house developed production lines**. - **Products**: Calcium Silicide, Ferro Titanium, Magnesium Ferrosilicon, and more. Used for **deoxidation, desulphurisation, grain refinement, and alloying** in steel and stainless steel production. - **Advantages**: Replaces traditional lump addition with **homogeneous mixing**, reduced waste, and improved steel consistency. - **Market Position**: One of India’s **leading manufacturers**, supplying **top 5 Indian steel companies** including Tata Steel, JSW, SAIL. - **Customer Retention**: ~85% of business comes from **repeat customers**; over **125 clients**, with 45+ having 10+ year relationships. - **Capacity Utilization**: Varies due to market cycles. FY24 output was **7,196 TPA** (down from 9,925 TPA in FY22), with recovery underway. - **Certification & QC**: ISO 9001-2008 certified; **on-site atomic absorption spectrophotometer** ensures precision quality control. #### **Aluminium Flipping Coils** - **Annual Capacity**: 15,000 TPA (expanded in FY23 via addition of a third furnace). - **Application**: Used in steel deoxidation, nitride formation, and strengthening low-carbon steels; superior alternative to ingots with better **precision, economy, and ease of use**. - **Output Trends**: Production dropped from **6,705 TPA in FY22** to **4,505 TPA in FY24**, due to **margin pressures, rising scrap prices**, and **import competition**. - **Strategic Move**: The company has **intentionally scaled down** operations in this segment to avoid unprofitable price wars and protect margins. A **final decision on the future** of this business was expected by mid-2025. - **Export Focus**: Exploring export opportunities to diversify this product line. --- ### **2. Diversification: Welding Consumables (Flux-Cored Wires)** A key strategic pivot, targeting **import substitution** and **industrial welding growth**. #### **Market Opportunity** - India imports **~90% of flux-cored arc welding (FCAW) consumables**, primarily from **China**. - Domestic market valued at **₹3,000 crore**, largely unorganized. - Strong demand from **infrastructure, construction, railways, shipbuilding, and energy**. - Government’s **Atma Nirbhar Bharat** and **China+1** strategies create a favorable environment. #### **SML’s Capabilities** - **Production Capacity**: Expanded from **1,200 TPA in FY24** to **3,600 TPA in FY25**, supported by **3 dedicated production lines**. - **Products**: 7 grades across **carbon steel, stainless steel, and hardfacing** categories, all **BIS, IBR, and IRS certified**. - **RDSO Approval** (Apr 2025): A major milestone enabling supply to **Indian Railways** and engineering contractors. - **Volume & Revenue Growth**: - **Q2 FY26 Revenue**: ₹3.7 crore (up from ₹1.5 crore YoY). - **Q1 FY26 Revenue**: ₹2.7 crore; **Q4 FY25: ₹2.4 crore**. - **Volumes**: 338 tonnes in Q2 FY26 (**+168% YoY**); monthly sales rose from **60 tonnes (Feb 2025)** to **>100 tonnes (Nov 2025)**. - **FY25 Full-Year Revenue**: ₹7.20 crore (from a new business line). - **Target**: **₹25 crore annual revenue** from FCAW within **two years**. - **Technology Edge**: Precise chemical formulations, high deposition rates, and weld quality give **attractive margins (~20% gross margin)**. #### **Go-to-Market Strategy** - Distribution network: **>10 dealers** across **5+ states**, with repeat orders indicating strong market acceptance. - **Product Trials**: Successful trials on **7 new FCAW grades**, including hardfacing and stainless variants. - **End-Use Applications**: Structural welding, boiler fabrication, wear-resistant surfacing, railways, oil & gas. --- ### **3. Emerging Venture: Biotechnology** A transformative diversification into **industrial biotechnology**, leveraging fermentation for **bioethanol, biogas, and health & nutrition**. #### **Strategic Drivers** - India’s **bioeconomy target**: $300 billion by 2030 (from $92 billion in 2022). - Government push for **2G ethanol, fuel blending, and green energy**. - Address **low market penetration** in industrial enzymes and **export-ready** health-nutrition products. #### **Facility & Partnerships** - **Pilot R&D Plant**: Operational in **Nagpur, Maharashtra**, with **14 kg batch capacity** using **Solid State Fermentation (SSF)**. - **First Batch**: Successfully produced in **May 2025**. - **Key Partnerships**: - **CSIR (Council of Scientific & Industrial Research)**: Exclusive access to **microbial cultures** (cellulase, betaglucosidase). - **LIT University & Hislop College**: Technology transfer and R&D collaboration. - **Investment**: ~₹50 lakh in pilot phase; **₹10 crore initial Capex**, with **planned investment of ₹100 crore** over 3–5 years. #### **Products & Applications** - **Industrial Enzymes**: For **cellulose degradation** in **2G ethanol and biogas production** (targeting distilleries like Reliance, Adani). - **Wastewater Treatment, Detergents, Textiles**. - **Health & Nutrition**: Protein isolates from **chana (chickpea)**, prebiotics, probiotics, dietary supplements – export-oriented. - **Proprietary Tech**: Fermentation cycle reduced from **6 to 4 days**, targeting 3 days. #### **Commercial Outlook** - **Revenue Generation**: Expected to begin in **H2 FY25**, scaling rapidly post-standardization. - **Long-Term Goal**: **100-tonne fermentation capacity**, with **CDMO (contract manufacturing)** potential. - **Margin Potential**: Biotech could deliver **~30% EBITDA margins** vs. 15–20% in metals. --- ### **Manufacturing & Infrastructure** - **Location**: Bhilai, Chhattisgarh – heart of India’s steel industry. - **Facilities**: Three state-of-the-art plants on **~450,000 sq. ft.**, with **planned land for expansion**. - **Production Lines**: - **Cored Wires**: 4 lines (10,000 TPA) - **Aluminium Flipping Coils**: 2 in-house lines (15,000 TPA) - **Flux-Cored Wires**: 3 lines (3,600 TPA) - **Backward Integration**: In-house production of **aluminium wire rods** (from 2018). - **In-House Engineering**: Designs and builds own machinery for **cost control, customization, and faster expansion**. - **Warehousing & Inventory**: - **Cored Wires**: 1,500 sq. m., **2,000+ tonne buffer (3 months)**. - **Aluminium Flipping Coils**: 2,800 sq. m., **4,000+ tonne buffer (4 months)**. - **Laboratory**: Fully functional chemical lab with **AAS spectrophotometer** for end-to-end quality assurance. --- ### **Strategic Growth Initiatives** 1. **Export Expansion** - Exports to **15+ countries** (Brazil, Turkey, South Africa, Australia). - Aiming for **>25% export contribution** in 3–5 years. 2. **Foundry & Fabrication Expansion** - Entering **SG Iron casting, automotive, and defence segments**. - Custom formulation support to **metallurgists and plant engineers**. 3. **Capex & Expansion Plans** - **Flux Cored Wires**: Plans to add **3 more lines (₹3 crore Capex)**, scalable to **9+ lines**. - **Biotech**: Phased Capex of **₹100 crore**, starting with **GMP-like facility for enzymes and proteins**. 4. **Innovation & R&D** - **5-member R&D team** focused on product development and process optimization. - Over **7 new FCAW variants** in pipeline; **5–8 biotech SKUs** under development. --- ### **Financial Position & Strategy** - **Balance Sheet**: **Debt-free**, with **healthy cash reserves** and **strong cash accruals**. - **Turnaround in Core Business**: FY25 cored wire revenue grew **26% YoY to ₹36.5 crore** (volumes +16%). - **Strategic Earnings Pivot**: - **Aluminium flipping coil** revenue declined to **₹6.4 crore (Q4 FY25)** due to conscious exit from low-margin segments. - Focus shifted to **higher-margin, value-added products** and **non-steel sectors**. - **Future Earnings Mix**: - **Cored Wires**: Stable core. - **Flux-Cored Wires**: Target **₹25 crore/year**. - **Biotechnology**: Potential for **₹40–50 crore/year**, with **higher valuation multiples**. --- ### **Management & Group Ecosystem** - **Parent Group**: Desraj Bansal Group – 50+ years in **metallurgy and energy**. - **Key Entities**: - **Bansal Brothers**: Leading producer of **Ferro Titanium** (70% market share), key supplier to SML. - **Sarthak Energy**: Energy vertical. - **Synergy**: Access to **cost-competitive noble ferroalloys** provides SML with a **strategic pricing and supply advantage**.