KRN Heat Exchanger Targets Capacity Expansion; Eyes Export Growth And Margin Boost

KRN Heat Exchanger & Refrigeration Ltd. is on track with its ambitious capacity expansion at the Neemrana facility, which recently became operational. “We are on the same track as we said before,” CMD Santosh Kumar Yadav told NDTV Profit. “This year we are going to achieve around 20% to 25% of this from new facility. And next year we are targeting to around 50% of this capacity. Peak utilisation should come in the next 2–3 years,” he said.

The company has also entered the bus air-conditioning segment through a business transfer agreement with Spare Refrigeration Systems Pvt. Ltd. “They have been in business for 15 years. We have complete backward integration for bus air conditioning, heat exchangers, tubing, sheet metal, and FRP,” Yadav said. He added that “in term of bus air conditioning business in India is growing, I think it is growing by 20% to 25% each year, especially for conventional bus air conditioning and electrical as well. So we are entering in both segments. We already started billing.”

On profitability, Yadav expressed confidence in margin improvement by 100–200 basis points in FY27, citing multiple factors. “From the new facility, we have two incentives, PLI from the central government and REAPS from the state government. PLI will give us 5% in the first year and 4% in the second, while REAPS offers 1.5% for the next 10 years,” he explained. “We also have cost savings from solar power, with 8 MW installed on rooftops, and higher margins from exports and bus air-conditioning.”

Exports remain a key focus area, with the company aiming for 50% of its revenue mix from overseas markets, particularly North America and Canada. “Currently, we have a higher mix in the UAE, but this will shift toward North America and Canada,” Yadav said.

Despite strong September quarter numbers, profit rising from Rs 17 crore to Rs 27 crore and margins at 20%, Yadav cautioned that this year margins will remain flat due to depreciation and limited incentives. “Next year, for sure, margins will increase because of both incentives and productivity,” he said.