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Shivalic Power Control

• Shivalic Power Control is coming out with initial public offering (IPO) of 64,32,000 shares of Rs 10 each in a price band Rs 95-100 per equity share.  
• The issue will open for subscription on June 24, 2024 and will close on June 26, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 9.50 times of its face value on the lower side and 10.00 times on the higher side. 
• Book running lead manager to the issue is Corporate Capital Ventures.
• Compliance Officer for the issue is Neha Sandal.

Profile of the company

Shivalic Power Control is an ISO-certified LT and HT electric panel manufacturer with an operating. It is a technology-driven company with a strong focus on quality, design and product development, which has allowed it to develop products suited to its customers’ requirements. its 1,25,000 Sq. Feet of in-house manufacturing unit allowed it to manufacture a diversified range of electric panels such as PCC Panels, IMCC Panels, Smart Panels, MCC Panels, DG synchronisation panels, Outdoor panels, HT Panels up to 33KV, VFD Panels, Power Distribution Boards, Bus Duct and LT & HT APFC Panels. it is authorised by industry leaders such as L&T, Siemens, Schneider Electric and TDK to manufacture fully type-tested panels as per IEC 61439 - 1&2 ,IEC 61641, IS1893 which it serves to more than 15 industrial Sectors in India as well as in outside India, viz, Nepal, Bangladesh, African countries such as Uganda, Kenya, Nigeria, Algeria.. 

The company has a dedicated team of engineers who are experts in designing and developing advanced designs which enable it to manufacture the Techno Modular Design - Fully Bolted Panels with Aluminium and Copper Bus Bar, which make it different from traditional welding panel manufacturers with a strong focus on the quality of the panel. It has advanced manufacturing facilities with automated controls to maintain quality and productivity, ensuring rigorous quality control and safety throughout its production process. It manufacturing facility is certified in accordance with international standards of quality management systems, environmental management systems, and occupational health and safety management systems as per ISO 9001:2015, ISO 14001:2015, ISO 45001:2018.

Proceed is being used for:

• Meeting the working capital requirements of the company. 
• Meeting out the funding for capital expenditure of the company: (a) Funding for procurement of new machineries; and (b) Construction of new assembly line by shedding the roof 
• Meeting out the inorganic growth through unidentified acquisition
• General corporate expenses.

Industry overview

The India - electrical equipment market size is estimated to grow at a CAGR of 11.68% between 2022 and 2027. The market size is forecast to increase by $52,975.77 million. The growth of the market depends on several factors such as an increase in the number of residential and commercial building projects, a rise in power generation from renewable energy sources, and an increase in investments in the power sector.

Demand for electrical equipment in India is increasing, encouraging suppliers to increase production of electrical equipment. India is one of the largest consumers and producers of electricity and India is the third largest electricity producer in the world. Furthermore, the demand for electrical equipment is expected to increase in this region due to the growth of the power sector. This will increase the opportunity for electrical equipment in India. Therefore, the growing domestic electricity demand and the growth of the power sector are encouraging domestic and international suppliers to invest in the country to meet the growing demand and capitalize on the India - electrical equipment market. Hence, the growing opportunity for electrical equipment deployment in India will drive the growth of the market during the forecast period.

The number of cyber-attacks, such as those by hackers and cybercriminals, is increasing in India. In this market, electrical systems are controlled and monitored by IT systems and infrastructure, such as control and data acquisition (SCADA) systems and automated production controls. In cyber-attacks, hackers can attack computer systems to cause infrastructure damage and power supply breakdown, resulting in power outages. Moreover, false data injection (FDI) is a common type of cyber-attack in power systems. A successful FDI attack on a computer system can cause an imbalance between power consumption and power generation in the network. Such actions can damage equipment, and continued failure can lead to widespread power outages. Hence, the threat posed by cyberattacks on the power industry could impede the growth of the market during the forecast period.

Pros and strengths

Ensuring excellence through rigorous quality control processes: At Shivalic, it takes immense pride in delivering products of the highest quality, and its dedication to this standard is certified by its ISO certifications (ISO 9001:2015, ISO 14001:2015, ISO 45001:2018). This certification serves as a testament to its stringent quality management practices and its commitment to meeting and exceeding international standards. Within its organization, it has established QA Lab which is an independent Testing Department that strives to provide best-in-class testing and QA services. Powered by a workforce of professionals and having good experience in the field of Electrical Panels testing, it aims to provide a complete range of testing services, while keeping customer satisfaction at its core. It is well equipped with high-end technical testing devices that make it competent enough to test the panel.

3D Bus Bar unique Bending: The quality of bus bars in electric control panels is crucial for several reasons. First, high-quality bus bars ensure efficient and reliable electrical conductivity, minimizing energy losses and reducing the risk of overheating. Additionally, high quality bus bars contribute to the overall safety of the electrical system by minimizing the potential for short circuits or electrical faults.

Strengthen marketing network: It continues to enhance its business operations by ensuring that its customer base increases through its marketing efforts. Its ability to customize its products for the various applications by its customers can help it diversify its operations across different customer segments. Its core competency lies in the thorough understanding of its customers’ needs and preferences, its vision to engage in sustainable practices and providing unparalleled quality of its products thereby achieving customer loyalty. Its marketing team includes the engineers who identify the required demand in the market and provide suggestion to make required changes in its product line.

Risks and concerns

Depends on top ten customers: Its top ten clients are responsible for a significant portion of its revenue, contributing aroun 40.77%, 53.02%, 56.78%, and 82.97% of its revenues from operations based on Restated Financials for the period nine months ended December, 2023 and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively. The loss of its major customers or a decrease in the volume of its products may adversely affect its revenues and profitability. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its operations and profitability.

Rely on a limited number of suppliers: It is dependent on limited number of suppliers for procurement of raw materials required for manufacturing its products. The company has a tie up with some of the well-known names such as Siemens, L&T, Schinder Electric and TDK for procurement of MCCBs, Switchgears and other raw material. The company has maintained a tie-up with few of its suppliers which needs to be renew annually. Apart from them it also has others suppliers with whom we have not entered into an agreement. So, the success of its business is accordingly significantly dependent on it maintaining good relationships with its suppliers. Raw materials prices are normally based on the quotes it receives from various suppliers. It relies on pre-booking capacity with its suppliers, based on its demand projections.

Significant amount of working capital: Its business requires significant amount of working capital for carrying-out its activities. Consequently, there could be situations where the total funds available may not be sufficient to fulfil its commitments, and hence it may need to incur additional indebtedness in the future, or utilize internal accruals to satisfy its working capital needs. Its future success depends on its ability to continue to secure and successfully manage sufficient amounts of working capital.

Outlook

Shivalic Power Control is engaged in the business of manufacturing of electrical panels. It is a technology-driven company with a strong focus on quality, design and product development, which has allowed it to develop products suited to its customers’ requirements. It manufactures a diversified range of electric panels such as PCC Panels, IMCC Panels, Smart Panels, MCC Panels, DG synchronisation panels, Outdoor panels, HT Panels up to 33KV, VFD Panels, Power Distribution Boards, Bus Duct and LT & HT APFC Panels. On the concern side, its business is dependent upon its ability to efficiently manage its manufacturing facilities, which are subject to various operating risks, including productivity of its workforce, breakdown of machinery, natural disaster and other inevitable incident. Although it has never encountered any of the risk as on date but any malfunction or breakdown of its machinery may require significant repair costs and consequently cause delays in its operations.

The company is coming out with an IPO of 64,32,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 95-100 per equity share. The aggregate size of the offer is around Rs 61.10 crore to Rs 64.32 crore based on lower and upper price band respectively. On performance front, the total revenue form operation of the company has increased by 43.30% from Rs 5,733.20 lakh in the fiscal year ended March 31, 2022 to Rs 8,215.68 lakh in the fiscal year ended March 31, 2023. Net Profit has increased by 309.73% from Rs 174.81 lakh in the fiscal year ended March 31, 2022 to profit of Rs 716.26 lakh in the fiscal year ended March 31, 2023. The major reason for increase in the net profit margin is because of the rising order size and increases in the margins of the company. Going forward, it is actively looking to execute more EPC projects because of the good margins in these projects. Having successfully executed EPC projects for its clients, it will elevates number of more EPC project in the near future.