Raipur based Shivalik Engineering Industries Limited, one of the leading precision engineering Company in India, has filed its draft red herring prospectus (DRHP) with the market regulator, Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).
The IPO, with a face value of Rs 5 per equity share, is a mix of fresh issue of shares up to Rs 335 crore and an offer for sale of up to 4.13 million equity shares by Promoters and Others Selling Shareholder. The offer also includes a reservation for a subscription by eligible employees and a discount is being offered to eligible employees bidding in the employee reservation portion.
The offer for sale consists of sale of equity shares up to 1,204,260 by Giriraj Singhania Promoter, up to 1,204,260 by Raghvendra Singhania, up to 802,760 by Vishal Sharma, up to 211,200 by Mohit Sharma, up to 12,320 by Pankaj Sharma, up to 220,000 by Dhruv Kumar Nagwani, up to 220,000 by Navin Kumar Nagwani, and up to 255,200 by Padam Kumar Nagwani.
The offer is being made through the book-building process, wherein not more than 50% of the net offer shall be available for allocation on a proportionate basis to qualified institutional buyers, not less than 15% of the net offer shall be available for allocation to non-institutional investors, and not less than 35% of the net offer shall be available for allocation to retail individual investors.
The Company intends to utilize the net proceeds from the fresh issuance to the extent of Rs 179.24 crore for funding capital expenditure for setting up of the Solar Plant, Rs 50 crore for expansion of existing units, i.e., expansion of existing foundry capacity by setting up a new foundry line and general corporate purpose.
Shivalik Engineering Industries began its operations in 2007, with a focus on manufacturing casting components, including high-quality metal parts for sectors such as automotive, agriculture, railways, and off-highway industries.
It mainly supplies precision engineering components for commercial vehicles, tractors, off-highway vehicles, pipe fittings, and rail components, offering 297 SKUs as of December 31, 2023.It has capbilites to develop and supply components in fully machined and assembled condition with components weights ranging from 10 kgs to 150 kgs.
The company provides end-to-end solutions, covering the entire value chain through vertically integrated operations-from design and precision engineering to melting, casting, cleaning, machining, assembly, and reverse engineering services.
In the commercial vehicle segment it caters to products such as (brake drums, wheel hubs, carriers, brackets, differential cases and covers, casings) and for the tractor segment it attends to components such as (trumpets, transmission housings, gearbox housings, clutch housings, front axle support, crankcases, and brackets). As of December 31,2023 it supply's critical and precision engineering components to over 15 OEMs in India and overseas.
Shivalik serves prominent Indian companies such as Daimler India Commercial Vehicles Private Limited, Ashok Leyland Limited, AAM India Manufacturing Corporation Private Limited, Watson & Chalin India Private Limited (Hendrickson Commercial Vehicle Systems (India)), and VE Commercial Vehicles Limited. It also exports to Accuride Corporation (USA) and Webb Wheel Products Inc. in the commercial vehicle sector. In the tractor segment, Shivalik's clients include Mahindra and Mahindra Limited, International Tractors Limited, and Escorts Kubota Limited. For off-highway vehicles, it supplies to DMW CNC Solutions India Private Limited, Shakti Precision Components (India) Private Limited, Precision Machine and Auto Components Private Limited, and PMP Drive Systems India Private Limited. In the railway sector, it caters to National Engineering Industries Limited. Additionally, Shivalik supplies to Star Pipe Products based in Houston, Texas, USA.
Under the guidance of SPSPL, Shivalik opened its first facility in Chhattisgarh with an initial manufacturing capacity of 25,000 MT. Over the years, it expanded its capacity and now operates three manufacturing facilities, and are in the process of setting up its separate, consolidated machining unit in Chhattisgarh, with their total installed manufacturing capacity as of December 31, 2023, the total installed manufacturing capacity for engineering, melting, casting, cleaning, and machining is 83,800 MT. It stands to be one of India's largest foundries and machine shops with a monthly capacity exceeding 8000MT.
India, one of the fastest-growing economies, is expected to become the world's third-largest auto component market by 2025. Production of commercial vehicles in India is projected to grow at a 2-4% CAGR between fiscal 2024 and 2029, with exports expected to grow at a 5-7% CAGR over the same period. Tractor production in India is anticipated to grow at a 6-8% CAGR from fiscal 2024 to 2029. The union budget for 2024-25 has allocated INR 751.4 billion for the automobile and auto components sector, as noted in a CRISIL Report.
Shivalik Engineering's restated consolidated revenue from operations during the fiscal year 2023 increased 64.74% to Rs 666.21 crore from Rs 404.39 crore in the previous year, primarily due to growth in the sale of products that is attributed to an increase in the scale of operations. Profit after tax grew 479.98% from Rs 6.37 crore for the financial year 2022 to Rs 36.97 crore for the financial year 2023.
For the nine months ended December 31, 2023, consolidated revenue from operations stood at Rs 521.18 crore and Profit after tax stood at Rs 55.64 crore.
Axis Capital Limited and IIFL Securities Limited are the book-running lead managers, and Bigshare Services Private Limited is the registrar of the issue. |
