Harekrishna Rubber Industries Limited IPO

01At a glance

What the company does: shreds and processes waste tyres at one plant at Khupari, Wada, District Palghar, Maharashtra, into crumb rubber and recovered steel wire (DRHP p.85, DRHP p.87).

Who pays it: buyers of crumb rubber and recovered steel, none of whom the prospectus names; the largest was 18.94% of FY26 revenue and the top ten 62.80% (DRHP p.30).

Why it is raising money: up to ₹1,270.00 lakh for working capital, ₹775.23 lakh for machinery to make reclaimed rubber from its own crumb rubber, and ₹550.00 lakh to repay a cash credit facility, with general corporate purposes left blank (DRHP p.83).

How fast it has grown: revenue from ₹272.52 lakh in FY24 to ₹2,301.97 lakh in FY25 and ₹5,612.26 lakh in FY26, growth of 744.7% and then 143.8% as the company computes it, with profit after tax going from a loss of ₹84.54 lakh to ₹727.30 lakh (DRHP p.98).

The one thing to understand: the company was incorporated on 1 August 2022 and had ₹272.52 lakh of revenue in FY24, so the three years of accounts cover a business that was starting up (DRHP p.70, DRHP p.54). Working capital has absorbed everything it earned: inventories rose from ₹139.21 lakh to ₹1,865.14 lakh and receivables from ₹171.54 lakh to ₹1,186.77 lakh over the same two years (DRHP p.53).

02The business, in plain words

Harekrishna buys end-of-life tyres, cuts them into strips and blocks, grinds the rubber to powder and separates out the steel wire, and sells crumb rubber and recovered steel (DRHP p.86, DRHP p.87). The issue would add a second line that takes that crumb rubber a stage further, softening and desulfurising it into reclaimed rubber for tyre, automotive, footwear and industrial rubber goods makers (DRHP p.86).

A rubber goods maker needs a cheaper input → buys crumb rubber → Harekrishna shreds and grinds waste tyres at Wada and screens out the steel → Harekrishna keeps what is left after tyres, power, labour and interest.

The company was incorporated on 1 August 2022 as Harekrishna Rubber Industries Private Limited and converted to a public limited company before this filing (DRHP p.70, DRHP p.53). It runs one plant, at Khupari, Wada, District Palghar (DRHP p.85). The promoter is Nidhi Agarwal, managing director (AP p.7).

Earnings equation: Profit ≈ tonnes of tyres processed × (crumb and steel realisation − tyre and processing cost) − power, labour and plant costs − interest. In FY26 cost of materials consumed was ₹4,463.29 lakh and direct expenses ₹1,370.85 lakh against revenue of ₹5,612.26 lakh, with a ₹1,392.83 lakh increase in inventories taken to the credit of expenses (DRHP p.54).

03Where the money comes from

Source: DRHP p.85. The prospectus gives production by product for FY25 and FY26 and sets out the FY24 table without figures in the extracted text; it does not split revenue between crumb rubber and steel.

Source: DRHP p.30; the top five figures are our arithmetic on the customer-by-customer rows. Revenue still depends on a few buyers, though less than it did: ten customers were 62.80% of FY26 revenue against 91.69% in FY24 (DRHP p.30). The prospectus says it cannot name them because the information is commercially sensitive (DRHP p.30). Purchases are similarly spread: the top ten suppliers were 60.20% of FY26 raw material cost against 89.21% in FY24 (DRHP p.31).

04The growth record

Source: DRHP p.98.

Net worth was negative ₹74.54 lakh, ₹140.03 lakh and ₹1,387.72 lakh; total borrowings ₹815.61 lakh, ₹1,025.10 lakh and ₹650.71 lakh; return on equity 153.23% in FY25 and 52.41% in FY26, return on capital employed negative 4.70%, 35.30% and 53.23%, and debt to equity negative 10.94, 7.32 and 0.47 (our arithmetic, DRHP p.53, DRHP p.98). The company computes revenue growth of 744.7% in FY25 and 143.8% in FY26, and profit growth of 353.8% and 238.9% (DRHP p.98). Our arithmetic: EBITDA margin rose 1,545 basis points and PAT margin 4,398 basis points over the two years (DRHP p.98).

The base is a start-up year: the company was incorporated in August 2022 and FY24 revenue was ₹272.52 lakh with a loss, so growth rates measured from that year describe a business coming into operation rather than one expanding from scale (DRHP p.70, DRHP p.54).

05What the growth is made of

Utilisation. Crumb rubber production went from 16,765 tonnes in FY25 to 46,387 tonnes in FY26 on unchanged installed capacity of 53,208 tonnes, so utilisation went from 31.51% to 87.18%; recovered steel went from 1,428 to 4,683 tonnes, utilisation from 26.27% to 86.14% (DRHP p.85). Revenue rose 143.8% over the same year (DRHP p.98).

Read from the filing: production of crumb rubber rose about 177% in FY26 while revenue rose about 144%, so realisation per tonne fell; the margin gain came from spreading fixed costs, with EBITDA margin moving from 15.00% to 17.60% (our arithmetic, DRHP p.85, DRHP p.98). The prospectus does not give realisation per tonne or the split of revenue between crumb rubber and steel, so the calculation cannot be taken further. Capacity has not changed in the two years shown, and the issue would add a different product rather than more crumb rubber capacity (DRHP p.85, DRHP p.86).

06Earnings quality

The item that needs explaining is the balance sheet. Over three years the company earned ₹857.33 lakh of profit and took ₹254.71 lakh out of operations, because inventories rose ₹1,725.93 lakh and receivables ₹1,015.23 lakh, funded in part by trade payables, which rose ₹1,207.58 lakh to ₹1,404.08 lakh at March 2026 (our arithmetic, DRHP p.53). At March 2026 inventories of ₹1,865.14 lakh and receivables of ₹1,186.77 lakh together were about 80% of the balance sheet total of ₹3,831.51 lakh (our arithmetic, DRHP p.53).

07The balance sheet

At March 2026 borrowings were ₹650.71 lakh: ₹372.21 lakh long-term and ₹278.50 lakh short-term, down from ₹1,025.10 lakh a year earlier (our arithmetic, DRHP p.53). The cash credit facility the issue would partly repay was sanctioned at ₹650.00 lakh with ₹630.68 lakh outstanding at 31 August 2026, at 9.15%, being the repo rate plus 3.90% (DRHP p.88). Debt to equity was 0.47 in FY26 against 7.32 in FY25 (DRHP p.98).

Property, plant and equipment was ₹354.09 lakh; inventories ₹1,865.14 lakh; trade receivables ₹1,186.77 lakh; cash and cash equivalents ₹21.70 lakh; trade payables ₹1,404.08 lakh, none owed to micro and small enterprises (DRHP p.53). Net worth went from negative ₹74.54 lakh at March 2024 to ₹1,387.72 lakh at March 2026, almost all of it retained profit (our arithmetic, DRHP p.53).

After the issue: the prospectus leaves the price and the issue amount blank, so the effect on net worth cannot be worked out; ₹550.00 lakh of the proceeds would repay part of the ₹630.68 lakh cash credit outstanding at 31 August 2026 (DRHP p.83, DRHP p.88).

08What the money is for

Source: DRHP p.83. The share of the fresh issue each object takes cannot be worked out, because the price and the issue amount are left blank.

The machinery is a line to turn the company's own crumb rubber into reclaimed rubber: strip and block cutters, a thread rolling machine, a cracker mill, vibrating screen and magnetic separation, a 10 cubic metre desulfurisation tank, refiners and related equipment, all quoted by Dalian Brahma International Trading Co. Ltd. of Dalian, China on 6 August 2026, with the quotation valid six months (DRHP p.86, DRHP p.87).

The company obtained a vendor due diligence report on that supplier from Dun & Bradstreet dated 11 September 2026 (DRHP p.87). The line would go into an additional shed already available at the existing premises, so no land is to be acquired (DRHP p.87). The prospectus does not state the capacity the new line would add, nor a commissioning date, in the pages read.

Into the business up to 50,44,000 new shares, with the price and the amount left blank (DRHP p.69). To selling shareholders up to 10,60,000 shares sold by Resgen Limited, 17.4% of the offer, with the amount left blank (DRHP p.82, our arithmetic).

09Who is selling

Source: DRHP p.82, DRHP p.50; the percentage is our arithmetic. Resgen Limited holds 23.41% of the capital before the offer and consented to the sale on 20 August 2026 (DRHP p.50). Its weighted average cost of acquisition is stated as ₹13.39 a share (AP p.1). The company receives nothing from this part of the offer (DRHP p.82).

Resgen Limited came in on 10 September 2025, when 35,000 shares were allotted to it by rights issue after the existing shareholders did not take up the offer; those 35,000 shares became 27,99,600 after the bonus issue of July 2026 (DRHP p.71, DRHP p.75).

10Promoters

The promoter is Nidhi Agarwal, managing director, who holds 91,63,040 shares, 76.59% of the capital before the offer (DRHP p.73). There is no promoter group (DRHP p.75). The board also has Ritesh Mavji Bhanushali as a non-executive director, two independent directors and an additional director; Tejal Joshi is chief financial officer and Anshita Jain company secretary (AP p.7).

Promoter economics: Nidhi Agarwal subscribed to the memorandum for 10,000 shares at ₹10 in August 2022, took 90,000 shares in a rights issue at ₹10 in March 2024 and 14,539 shares in a rights issue at ₹1,000 in April 2025, and received 90,48,502 bonus shares on 20 July 2026 (DRHP p.73).

The average cost of acquisition is stated as ₹1.70 a share, and the weighted average cost over three years as ₹1.83 (DRHP p.75, AP p.7). None of the promoter's shares is pledged, and all of them are to be locked in from allotment (DRHP p.73). The prospectus reports no litigation of any kind against or by the promoter (DRHP p.232, AP p.7).

11Who already owns it

Before the offer there are 1,19,63,120 shares held by 8 shareholders: Nidhi Agarwal with 76.59% and seven public holders with 23.41%, of whom Resgen Limited holds 23.40% and six individuals hold 80 shares each (DRHP p.74, DRHP p.75). Two years before the filing there was one holder with 99,999 shares (DRHP p.76).

The capital history is short: 10,000 shares on incorporation at ₹10, a rights issue of 90,000 shares at ₹10 in March 2024, a rights issue of 14,539 shares at ₹1,000 in April 2025, a rights issue of 35,000 shares to Resgen Limited in September 2025, and a bonus issue of 1,18,13,581 shares, 79 for one, on 20 July 2026 against the then existing 1,49,539 shares (DRHP p.70, DRHP p.71).

The bonus was made out of reserves and surplus of ₹1,370.08 lakh at 31 March 2026 (DRHP p.72). The securities premium account is nil after it (DRHP p.69). Because the price and the issue size are left blank, the shareholding after the offer is not stated (DRHP p.75).

12What changed just before the IPO

• The company converted from private to public before this filing and the authorised capital was raised from ₹15 lakh to ₹20 crore on 16 July 2026 (DRHP p.70).
• A bonus issue of 1,18,13,581 shares, 79 for one, was allotted on 20 July 2026, taking the capital from 1,49,539 shares to 1,19,63,120 (DRHP p.71).
• Resgen Limited became a 23.41% shareholder on 10 September 2025, taking up 35,000 shares in a rights issue the existing shareholders did not exercise, and is now selling 10,60,000 of the resulting 27,99,600 shares (DRHP p.71, DRHP p.82).
• A rights issue of 14,539 shares was made to Nidhi Agarwal at ₹1,000 a share in April 2025 (DRHP p.71).
• Crumb rubber utilisation went from 31.51% in FY25 to 87.18% in FY26 and steel recovery from 26.27% to 86.14% (DRHP p.85).
• Revenue went from ₹272.52 lakh in FY24 to ₹5,612.26 lakh in FY26 and the company moved from a loss to ₹727.30 lakh of profit (DRHP p.98).
• Inventories rose from ₹139.21 lakh at March 2024 to ₹1,865.14 lakh at March 2026, and trade payables from ₹196.50 lakh to ₹1,404.08 lakh (DRHP p.53).
• Borrowings fell from ₹1,025.10 lakh at March 2025 to ₹650.71 lakh at March 2026, and debt to equity from 7.32 to 0.47 (our arithmetic, DRHP p.53, DRHP p.98).

13Capacity and expansion

Source: DRHP p.85. Installed capacity was the same in FY25 and FY26, and utilisation in FY25 was 31.51% and 26.27% (DRHP p.85).

The issue would not add crumb rubber capacity. It would add a reclaimed rubber line in an additional shed at the same premises, taking crumb rubber the company already makes and desulfurising it into a product for tyre, automotive, footwear and industrial rubber goods makers (DRHP p.86, DRHP p.87). The company gives the high utilisation of the existing lines as the reason for the move (DRHP p.87). The prospectus states that information on capacity utilisation is based on assumptions and that actual volumes may differ (DRHP p.30). It does not state the tonnage the new line would add or when it would start.

14Market size and industry structure

As claimed: the prospectus does not state a size for the crumb rubber or reclaimed rubber market in the pages read, and the study found no industry report commissioned for this draft. It states that information relating to peer group entities has been derived from publicly available sources (DRHP p.21).

The part that is addressable: crumb rubber and recovered steel sold to industrial buyers, and, if the new line is built, reclaimed rubber for tyre, automotive, footwear and industrial rubber goods makers (DRHP p.86).

What the company is today: one plant, 53,208 tonnes of crumb rubber capacity, 46,387 tonnes produced and ₹5,612.26 lakh of FY26 revenue (DRHP p.85, DRHP p.98). Because no market size is stated, the company's share cannot be worked out from the filing.

On structure, the prospectus notes that fluctuations in demand may leave its capacity under-utilised and that persistent under-utilisation would affect operating efficiency (DRHP p.30).

15Competitive position

The prospectus names no competitor outside the peer table. The reasons it gives for the business working are a tyre recycling plant at Khupari, Wada described as state of the art, and the ability to take crumb rubber it already produces through a further processing stage rather than building a new raw material chain (DRHP p.87). Its pitch for the new product is that reclaimed rubber uses its own output as the principal input (DRHP p.87).

Against that, it has one plant and one process, no long-term contracts are disclosed with either customers or suppliers, and the company says it cannot name either because the information is commercially sensitive (DRHP p.30, DRHP p.31).

16Peers the company named

Peer named in the offer document: Horizon Reclaim (India) Limited (DRHP p.97).

Source: DRHP p.97; the peer's price of ₹117.25 is the last traded price on BSE on 15 September 2026. The prospectus gives the industry P/E as 21.79 for both the highest and the lowest, because there is one listed peer (DRHP p.96). Horizon Reclaim's book value per share is about 3.5 times Harekrishna's, while Harekrishna's stated return on net worth is about four times the peer's (our arithmetic, DRHP p.97).

No price band exists yet, so this study works out no valuation. The prospectus's own return on net worth for FY26 is given as 52.41% in the basis for offer price section and 51.41% in the peer table (DRHP p.96, DRHP p.97).

17Risks, in plain words

A three-year record that starts at a standstill: the company was incorporated in August 2022 and had ₹272.52 lakh of revenue and a ₹84.54 lakh loss in FY24 (DRHP p.70, DRHP p.54) → the growth rates in the filing measure a start-up coming on stream, not an established business compounding → there is one full year, FY26, at close to capacity (DRHP p.85).

Working capital: inventories and receivables were ₹3,051.91 lakh of a ₹3,831.51 lakh balance sheet at March 2026 (our arithmetic, DRHP p.53) → cash has not followed profit, with operating cash flow of negative ₹254.71 lakh over three years against ₹857.33 lakh of profit (our arithmetic, DRHP p.98) → ₹1,270.00 lakh of the proceeds, the largest object, is for working capital (DRHP p.83).

Supplier credit: trade payables rose from ₹252.56 lakh to ₹1,404.08 lakh in FY26, about a quarter of the year's cost of materials (our arithmetic, DRHP p.53, DRHP p.54) → the stock build has been funded in part by suppliers → none of those payables is owed to micro or small enterprises, which have statutory payment terms (DRHP p.53).

Customers: the top ten were 62.80% of FY26 revenue and the largest 18.94% (DRHP p.30) → the prospectus does not name them or disclose contracts with them → the concentration was 91.69% as recently as FY24 (DRHP p.30).

Capacity: crumb rubber ran at 87.18% and steel recovery at 86.14% in FY26 on capacity unchanged since FY25 (DRHP p.85) → there is little headroom in the existing lines, and the issue adds a different product rather than more of the same → the prospectus does not state the tonnage the new line would add (DRHP p.86).

A single imported supplier for the new line: the whole reclaimed rubber line is quoted by one vendor in Dalian, China, on a quotation valid six months (DRHP p.86, DRHP p.87) → delivery, duty or exchange rate movement would fall on the company → no order has been placed, and the company has a vendor due diligence report rather than a contract (DRHP p.87).

Tax demand: an income tax demand of ₹92.50 lakh for assessment year 2025-26 under Section 143(1) is outstanding against the company (DRHP p.231) → that is about 13% of FY26 profit after tax (our arithmetic, DRHP p.98) → it is the only proceeding against the company disclosed (AP p.7).

Issue-specific: the price, the issue amount, the market maker reservation and the sum for general corporate purposes are all left blank (DRHP p.69, DRHP p.83), the fund requirement has not been appraised by any bank or financial institution (DRHP p.84), and 10,60,000 shares of the offer go to a selling shareholder rather than to the company (DRHP p.82).

18Litigation and regulatory matters

There is no criminal proceeding, civil proceeding or regulatory action against the company, and none of any kind against the promoter; the summary table records one tax proceeding against the company and one civil proceeding filed by a director other than the promoter (AP p.7, DRHP p.231, DRHP p.232). The statutory auditors have expressed no qualification, reservation, adverse remark or emphasis of matter on the financial statements for the periods covered (AP p.7).

19Related-party transactions

Source: DRHP p.57, DRHP p.58.

The counterparties are Samruddhi Industries, a firm in which Nidhi Agarwal and Ritesh Mavji Bhanushali are partners; Colossal Eco Green (OPC) Private Limited, which shares a director; Greatvalley Recycling (OPC) Private Limited, in which the wife of Ritesh Mavji Bhanushali is a director; and Resgen Limited, described as an associate company (DRHP p.57). The company both purchases from and sells to the first three (DRHP p.57). At March 2026 it owed ₹102.21 lakh to Samruddhi Industries, ₹231.15 lakh to Colossal Eco Green and ₹2.90 lakh to Greatvalley Recycling, against ₹13.87 lakh owed to Colossal Eco Green at March 2024 (DRHP p.58).

What changed in the two years before the filing: ₹309.85 lakh was received against sales from Resgen Limited in FY26, the first such receipt, and Resgen Limited became a 23.41% shareholder in September 2025 (DRHP p.58, DRHP p.71). The unsecured loan payable to Nidhi Agarwal went from ₹306.59 lakh at March 2024 to ₹358.30 lakh at March 2025 and ₹120.32 lakh at March 2026, and ₹145.39 lakh of it was converted into share capital in FY26, which is the April 2025 rights issue of 14,539 shares at ₹1,000 (DRHP p.58, DRHP p.71). The loan payable to Ritesh Mavji Bhanushali of ₹6.80 lakh was repaid in FY26 (DRHP p.58).

20What the offer document does not say

Customers and suppliers are not named; the prospectus states expressly that it will not name them because the information is commercially sensitive. Revenue is not split between crumb rubber and recovered steel, and realisation per tonne is not given, so the fall in realisation implied by production rising faster than revenue cannot be verified against a price. The capacity the proposed reclaimed rubber line would add, and the date it would start, are not stated.

The price at which the 35,000 shares were allotted to Resgen Limited in September 2025 is not printed in the capital history table as extracted. No size is given for the crumb rubber or reclaimed rubber market. The price, the issue amount, the market maker reservation and the sum for general corporate purposes are all left blank in this draft.

21Five questions for management

1. What is the realisation per tonne for crumb rubber and for recovered steel, and how did each move between FY25 and FY26 while production rose 177%?
2. Why did inventories reach ₹1,865.14 lakh at March 2026, about 122 days of cost of materials, and what is in that stock?
3. What are the payment terms behind trade payables of ₹1,404.08 lakh, and how much of the ₹1,270.00 lakh of working capital money would go to reducing them?
4. What tonnage of reclaimed rubber would the proposed line make, when would it start, and what price does reclaimed rubber fetch against crumb rubber?
5. At what price were the 35,000 shares allotted to Resgen Limited in September 2025, and why did the existing shareholders not take up that rights issue?

2Sources and cited facts

This study was read from 2 documents the company filed. The 92 figures it cites are listed under the document each came from, with the page and the sentence as printed.