Craftsman Automation has approved the establishment of a new manufacturing facility, Hosur Unit - 3, in Tamil Nadu to address near-capacity utilization levels in its Aluminium Products division. The Board of Directors sanctioned the project on July 29, 2026, following a strong Q1FY26 performance where net profit surged 116% to ₹1,505.5 crore. This expansion is critical for meeting incremental demand from automotive OEM customers in Southern India, where existing capacity utilization stands at approximately 85%.

The approval was disclosed pursuant to Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company also referenced SEBI Master Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 issued on July 11, 2023, as updated on January 30, 2026. The strategic move aims to enhance operational efficiency and improve logistics by locating the unit closer to key original equipment manufacturers (OEMs).

Project Details and Financing

The new facility will be located at SF. No. 11 & 28, Komaranapalli Village, Denkanikottai Taluk, Krishnagiri District, Tamil Nadu – 635114. The total estimated investment is ₹250 crore, split into two phases. Phase I requires an estimated ₹100 crore, while Phase II involves ₹150 crore.

The project is proposed to be financed substantially through term loans, with the balance funded via internal accruals. Management expects the facility to be commissioned within 6–8 months, subject to receipt of requisite approvals and completion of project execution activities.

Q1FY26 Financial Context

The capacity expansion follows a robust start to FY26, with consolidated revenue from operations jumping 36.3% year-on-year to ₹24,315.8 crore. EBITDA margin expanded to 15.8% from 14.85% in Q1FY25, driven by operating leverage across key segments. The Aluminium Products segment, which contributed ₹14,793.4 crore in revenue, remains the largest contributor, highlighting the immediate need for additional production lines to sustain growth momentum.

Strategic Rationale

Craftsman Automation currently operates aluminium products manufacturing facilities in Southern India, catering primarily to leading two-wheeler and passenger vehicle OEMs. With existing capacities nearing optimal utilization levels, the Board identified a need for additional infrastructure to support future business growth. The proposed location provides strategic proximity to key OEM customers, reducing logistics costs and improving supply chain responsiveness.

What the Numbers Show

The decision to invest ₹250 crore in new capacity underscores management’s confidence in sustained demand growth, particularly in the two-wheeler and passenger vehicle segments. With existing utilization at 85%, the risk of order leakage due to capacity constraints is high. The phased approach allows for capital efficiency, while the reliance on term loans suggests a balanced approach to leverage, supported by the strong cash flows generated in Q1FY26. The rapid commissioning timeline of 6–8 months indicates that land and preliminary approvals are likely already in place, minimizing execution risk.

Craftsman Automation Limited has agreed to invest ₹1,07,25,000 in Sterling MH Wind Private Limited to acquire a 26.66% equity stake, securing a long-term renewable energy supply for its manufacturing facilities in Maharashtra. The transaction, disclosed on July 27, 2026, involves the subscription of 2,14,500 equity shares at a price of ₹50 per share, including premium. This strategic move is designed to optimize power procurement costs while advancing the company’s sustainability initiatives through the Group Captive framework prescribed under the Electricity Act, 2003 and Electricity Rules, 2005.

The investment is structured through a Power Supply Agreement (PSA), a Share Subscription and Shareholders' Agreement (SSSHA), and a Supplementary Agreement with Sterling MH Wind Private Limited and its sponsor, Sterling Agro Industries Limited. The disclosure was made pursuant to Regulation 30 read with Schedule III of the SEBI (LODR) Regulations, 2015. The company confirmed that the transaction does not constitute a related party transaction, as neither the promoters nor group companies of Craftsman Automation hold any interest in the target entity.

Sterling MH Wind Private Limited is a Special Purpose Vehicle (SPV) incorporated on February 2, 2026, specifically for the development and operation of a wind power project located in the Satara and Dhule districts of Maharashtra. The target entity has an authorized capital of ₹15,00,000 and a paid-up capital of ₹1,00,000. As a newly incorporated entity, it reported no turnover for FY25 or the preceding three years. The project is promoted by Sterling Agro Industries Limited, an established entity operating under the NOVA Dairy brand with prior experience in renewable energy development.

The primary objective of this acquisition is to procure renewable wind power for Craftsman Automation’s manufacturing facilities in Maharashtra, including its Pune operations. By utilizing the Group Captive framework, the company aims to ensure a stable and cost-effective power supply. The transaction involves cash consideration only, with no share swap or other forms of payment. Completion of the acquisition is contingent upon the fulfillment of conditions set out in the transaction documents and the finalization of share subscription and allotment formalities.

Strategic Implications

The acquisition highlights a shift towards vertical integration in energy procurement for manufacturing operations. By taking a minority stake in a dedicated wind power SPV, Craftsman Automation mitigates exposure to volatile grid electricity prices while meeting regulatory and corporate sustainability targets. The involvement of Sterling Agro Industries Limited as the sponsor adds credibility to the project execution, given their established track record in the dairy sector and prior experience in wind and solar projects. This structure allows Craftsman Automation to benefit from renewable energy without bearing the full operational burden of power generation assets.