MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion is intended to convey managements perspective on our financial condition and results of operations for the period ended on December 31, 2023 and financial year ended March 31, 2023, 2022 and 2021. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled "Financial Information" on page 160 of this Draft Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 24 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward- looking statements and for further details regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 16 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.
In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Shivalic Power Control Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for the period ended on December 31, 2023 and financial year ended March 31, 2023, 2022 and 2021 included in this Draft Red Hearing Prospectus beginning on page 160 of this Draft Red Herring Prospectus.
BUSINESS OVERVIEW
Shivalic Power Control Limited is an ISO-certified LT and HT electric panel manufacturer with an operating history of 20 years. We are a technology-driven company with a strong focus on quality, design and product development, which has allowed us to develop products suited to our customers requirements. Our 1,25,000 Sq. Feet of in-house manufacturing unit allowed us 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. We are 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 we serve 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 us to manufacture the Techno Modular Design – Fully Bolted Panels with Aluminium and Copper Bus Bar, which make us different from traditional welding panel manufacturers with a strong focus on the quality of the panel.
Our promoter Mr. Amit Kanwar Jindal started Shivalic in 2004 with Low Voltage Panel assembly with a vision to constantly provide quality products by adapting to the latest technologies. During this journey of two decades, Shivalic has served more than 500+ Clients in different industries such as Sugar, Papers, Cement, Steel, FMCG, Automobile etc. Our clientele in this industry includes Hewlett Packard, DCM Shriram, Rungta Mines, Reliance Cement, Kalpataru Power Transmission, Jindal Steel & Power, JSW, Bikaji Foods, Dabur, Radico, Naini Paper, J K Paper, Orient Papers, J K Cement, Escorts, Yamaha Motors and many more. We do not limit ourselves to traditional application of panels, our sales & marketing team is always keen to identify new opportunities where we can supply our panels. a
For detailed information on the business of our Company please refer to "Our Business" beginning on page numbers 105 of this Draft Red Herring Prospectus.
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR AND STUB PERIOD
As per mutual discussion between the Board of the Company and LM, in the opinion of the Board of the Company there have not arisen any circumstances since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus and which materially and adversely affect or is likely to affect within the next twelve months except as follows:
FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 24 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:
DISCUSSION ON RESULT OF OPERATION
Our Significant Accounting Policies
For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled "Financial Statements" beginning on page 160 of the Draft Red Herring Prospectus.
Overview of Revenue & Expenditure
Our revenue and expenses are reported in the following manner:
Revenues
Our principal component of revenue from operations is generated from the manufacturing and sale of Electric Control Panels.
Our other income mainly comprises of interest income on bank deposits, foreign exchange fluctuation gain/loss and other miscellaneous income.
(Amount in lakhs)
Particulars |
For the period ended December 31, 2023* | For the period ended March 31, |
||
| 2023 | 2022 | 2021 | ||
Income |
||||
Revenue from operations |
6,355.88 | 8,215.68 | 5,733.20 | 5,222.44 |
As a % of total Income |
99.64% | 99.35% | 99.86% | 99.70% |
Other Income |
23.28 | 53.71 | 8.24 | 15.56 |
As a % of Total Income |
0.36% | 0.65% | 0.14% | 0.30% |
Total Income |
6,379.16 | 8,269.39 | 5,741.44 | 5,238.01 |
Expenditure
Our total expenditure primarily consists of Cost of material consumed, employee benefit expenses, finance cost, Depreciation & Amortization expenses and other expenses.
Cost of material consumed are primarily in relation to purchases raw material (such as switchgears, MCBs etc.) for manufacturing.
Changes in Inventory of finished goods & work- in progress primarily consist of work in progress and finished goods.
Our employee benefit expenses mainly include salaries and other benefits, contribution to Provident Fund and other funds and staff welfare expenses.
Our finance costs mainly include interest expense on borrowings and other borrowing cost.
Depreciation includes depreciation of tangible assets.
It includes Power & Fuel, Insurance, Legal & Professional, Repair & Maintenance-Machinery & Building, Legal & Professional Expenses and other miscellaneous expenses.
RESULTS OF OUR OPERATION:
Particulars |
For the Period from 01.04.202 3 to 31.12.202 3 | For the year ended March 31, | ||
| 2023 (Lakhs) | 2022 (Lakhs) | 2021 (Lakhs) | ||
Income: |
||||
| I. Revenue from Operations | 6,355.88 | 8,215.68 | 5,733.2 0 | 5,222.4 4 |
| As a % of Total Income | 99.64% | 99.35% | 99.86% | 99.70% |
| %Increase (Decrease) | - | 43.30% | 9.78% | - |
| II. Other Income | 23.28 | 53.71 | 8.24 | 15.56 |
| As a % of Total Income | 0.36% | 0.65% | 0.14% | 0.30% |
| %Increase (Decrease) | - | 552.07% | -47.08% | - |
III. Total Income (I + II) |
6,379.16 | 8,269.39 | 5,741.4 4 | 5,238.0 1 |
| Variance | - | 2,527.95 | 503.43 | - |
| Variance % | - | 44.03% | 9.61% | - |
| IV. Expenses: | ||||
| Cost of Materials Consumed | 5,413.31 | 6,449.94 | 4,357.5 3 | 4,667.6 2 |
| As a % of Total Income | 84.86% | 78.00% | 75.90% | 89.11% |
| %Increase (Decrease) | - | 48.02% | -6.64% | - |
| Changes in Inventories of Finished Goods & WIP | (806.85) | (24.24) | 526.02 | (303.97) |
| As a % of Total Income | -12.65% | -0.29% | 9.16% | -5.80% |
| %Increase (Decrease) | - | - 104.61% | 273.05% | - |
| Employee Benefits Expenses | 267.48 | 246.43 | 216.40 | 217.00 |
| As a % of Total Income | 4.19% | 2.98% | 3.77% | 4.14% |
| %Increase (Decrease) | - | 13.88% | -0.28% | - |
| Finance Costs | 221.24 | 242.61 | 214.22 | 279.57 |
| As a % of Total Income | 3.47% | 2.93% | 3.73% | 5.34% |
| %Increase (Decrease) | - | 13.25% | -23.37% | - |
| Depreciation and Amortization Expenses | 82.55 | 124.46 | 106.90 | 127.47 |
| As a % of Total Income | 1.29% | 1.51% | 1.86% | 2.43% |
| %Increase (Decrease) | - | 16.43% | -16.14% | - |
| Other Expenses | 172.17 | 271.41 | 129.19 | 139.81 |
| As a % of Total Income | 2.70% | 3.28% | 2.25% | 2.67% |
| %Increase (Decrease) | - | 110.10% | -7.60% | - |
V. Total Expenses |
5,349.90 | 7,310.61 | 5,550.2 5 | 5,127.4 9 |
| As a % of Total Income | 83.87% | 88.41% | 96.67% | 97.89% |
| %Increase (Decrease) | - | 31.72% | 8.24% | - |
Earning Before Interest, Depreciation and Tax (EBITDA) |
1,309.77 | 1,272.13 | 504.07 | 501.98 |
| As a % of Total Income | 20.53% | 15.38% | 8.78% | 9.58% |
| %Increase (Decrease) | - | 152.37% | 0.42% | - |
Earning Before Interest Tax (EBIT) |
1,227.22 | 1,147.67 | 397.17 | 374.51 |
| As a % of Total Income | 19.24% | 13.88% | 6.92% | 7.15% |
| %Increase (Decrease) | - | 188.96% | 6.05% | - |
VI. Profit/(Loss) Before Tax (III-V) |
1,029.26 | 958.78 | 191.19 | 110.51 |
| As a % of Total Income | 16.13% | 11.59% | 3.33% | 2.11% |
| %Increase (Decrease) | - | 401.48% | 73.01% | - |
VIII . Profit/(Loss) After Tax (VI-VII) |
760.11 | 716.26 | 174.81 | 67.29 |
| As a % of Total Income | 11.92% | 8.66% | 3.04% | 1.28% |
| %Increase (Decrease) | - | 309.73% | 159.80% | - |
REVIEW OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2023
Income from Operations
Our revenue from operations for the period ended December 31, 2023 was Rs. 6,355.88 Lakhs which is almost 99.64% of the total revenue and which includes sale of goods.
Other Income
Our other income for the period ended December 31, 2023 was Rs. 23.28 Lakhs which was about 0.36% of total revenue.
Expenditure
Cost of Material Consumed
Cost of material consumed for the period ended December 31, 2023 was Rs. 5,413.31 Lakhs which was about
84.86 % of the total revenue and which includes purchase of inventory.
Changes in inventory of finished goods, work-in -progress, stock-in trade
The Changes in inventory of finished goods costs for the period ended December 31, 2023 were Rs. (806.85) Lakhs which was about (12.65) % of the total revenue and it primarily consist of changes in Finished goods.
Employee Benefits expenses
The employee benefits expenses for the period ended December 31, 2023 were Rs. 267.48 Lakhs which was about 4.19 % of the total revenue and which include salaries and other benefits, contribution to Provident fund, gratuity and other funds and staff welfare expenses.
Financial Costs
Financial costs for the period ended December 31, 2023 were Rs. 221.24 Lakhs which was about 3.47% of the total revenue and which consists of include interest expense on borrowings and other borrowing cost.
Depreciation and Amortization Expense
Depreciation for the period ended December 21, 2023 were Rs. 82.55 Lakhs which was about 1.29 % of the total revenue and which consists of depreciation of tangible assets.
Other Expenses
The other expenses for the period ended December 31, 2023 were Rs. 172.17 Lakhs which was about 2.70% of the total revenue and which include Power & Fuel, Insurance, Legal & Professional, Repair & Maintenance- Machinery & Building, Legal & Professional Expenses and other miscellaneous expenses.
EBIDTA
Our EBITDA for the period ended December 31, 2023 were Rs. 1,309.77 Lakhs.
Profit before Interest and Tax
Our PBIT for the period ended December 31, 2023 were Rs. 1,029.26 Lakhs.
Profit /(Loss) after Tax
PAT for the period ended December 31, 2023 was Rs. 760.11 Lakhs.
FISCAL YEAR ENDED MARCH 31, 2023 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022
Income
Revenue from Operation:
The Total Revenue Form Operation of the company has increased by ? 2,482.47 lakhs and 43.30 % from ? 5,733.20 Lakhs in the fiscal year ended March 31, 2022 to ? 8,215.68 Lakhs in the fiscal year ended March 31, 2023. As a business strategy, the issuer company have started bidding for higher order value as compared to the last year which provide the company a competitive edge and become the major reason for increase in revenue. Apart from this, the issuer company has also reduced the dependency from one state (Haryana) which contribute approx. 61.36% in FY 22 and now in FY 23 it is approx. 29.21% of Total Revenue from Operation.
Other Income:
The ‘other income has increased by 552.07% from ? 8.24 Lakhs in Fiscal 2022 to ? 53.71 Lakhs in Fiscal 2023, primarily as a result of increase in cash discount from ? 3.18 Lakhs in Fiscal 2022 to 31.21 Lakhs in Fiscal 2023.
Expenditure
Total Expenditure increased by ? 1,760.36 Lakhs and 31.72% from ? 5,550.25 Lakhs in the fiscal year ended March 31, 2022 to ? 7,310.61 Lakhs in the fiscal year ended March 31, 2023. The Overall expenditure was increased mainly due to increase in Cost of Material Consumed.
Cost of Material Consumed
Cost of Material Consumed increased by ? 2,092.42 Lakhs and 48.02% from ? 4,357.53 Lakhs in the fiscal year ended March 31, 2022 to ? 6,449.94 Lakhs in the fiscal year ended March 31, 2023. Cost of material consumed increases due to increase in business volume and operations.
Changes in inventory of finished goods, work-in -progress, stock-in trade
Changes in inventory of finished goods decreased by ? 550.26 Lakhs and (104.61) % from ? 526.02 Lakh in the fiscal year ended March 31, 2022 to ? (24.24) Lakhs in the fiscal year ended March 31, 2023. The decrease of change in inventory is primarily due to excess inventory, as a company is shifting to deliver big size orders for which the company increase the on-floor time and start holding excess inventory as compared to the FY 22.
Employee Benefit Expense
Employee Benefit Expenses increased by ? 30.03 Lakhs and 13.88% from ? 216.40 Lakhs in the fiscal year ended March 31, 2022 to ? 246.43 lakhs in the fiscal year ended March 31, 2023. Overall employee cost was increased due to increase in number of employees and annual increment of salaries & other benefits of employees.
Finance Costs
Our finance costs has decreased by ? 28.39 Lakhs and 13.25% from ? 214.22 lakhs in the fiscal year ended March 31, 2022 to ? 242.61 Lakhs in the fiscal year ended March 31, 2023. The decrease was mainly on account of decrease in long term loans & advances from ? 31.17 Lakhs in FY ?2022 to ? 24.00 Lakhs in FY 2023 and decrease in short-term borrowing from ? 1797.22 Lakhs in FY 2022 to ?1454.03 Lakhs in FY 2023.
Depreciation and Amortization Expense
Depreciation in terms of value increased by ? 17.56 Lakhs and 16.43% from ? 106.90 lakhs in the fiscal year ended March 31, 2022 to ? 124.46 Lakhs in the fiscal year ended March 31, 2023. The Depreciation is increase due to addition of new assets in the pool. However, the total asset of the company has been decreased during the year.
Other Expenses
Other Expense was increased by ? 142.23 Lakhs and 110.10% from ? 129.19 Lakhs in the fiscal year ended March 31, 2022 to ? 271.41 Lakhs in the fiscal year ended March 31, 2023. Other Expense was increased due to increase in power & fuel charges, Repair & Maintenance – Machinery & Building, legal and professional fees, and other miscellaneous expenses.
Profit before Interest, Depreciation and Tax
Profit / Loss before Interest, Depreciation and Tax has increased by ? 768.06 Lakhs and 152.37% from ? 504.07 Lakhs in the fiscal year ended March 31, 2022 to Profit before Interest, Depreciation and Tax of ? 1,272.13 lakhs in the fiscal year ended March 31, 2023. Profit before exceptional & extraordinary items and Tax was increased due to increase in revenue from operations and increase in profit margins.
Net Profit after Tax and Extraordinary items
Net Profit has increased by ? 541.44 lakhs and 309.73% from ? 174.81 Lakhs in the fiscal year ended March 31, 2022 to profit of ? 716.26 lakhs 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. Apart from it, RMC (raw material) also falls with rising volumes, as we get better discounts from vendors.
FISCAL YEAR ENDED MARCH 31, 2022 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2021
Income
Revenue from Operation:
Total revenue has increased by ? 510.76 Lakhs and 9.78% from ? 5,222.44 Lakhs in the fiscal year ended March 31, 2021 to ? 5,733.20 Lakhs in the fiscal year ended March 31, 2022. The increase in revenue of the company is attributed to the organic growth of the company.
Other Income:
Our other income decreased by ? 7.33 Lakhs and 47.08% from ? 15.56 Lakhs in Fiscal 2021 to ? 8.24 Lakhs in Fiscal 2022, primarily as a result of decrease in the interest income ? 5.40 from ? 7.36 in Fiscal 2021 to 1.96 in fiscal 2022.
Expenditure
Total Expenditure increased by ? 422.75 Lakhs and 8.24% from ? 5,127.49 Lakhs in the fiscal year ended March 31, 2021 to ? 5,550.25 Lakhs in the fiscal year ended March 31, 2022. The reason for increase in the expenditure is due to increase in the volume and business operation.
Cost of Material consumed
Cost of material consumed decreased by ? 310.09 Lakhs and 6.64% from ? 4,667.62 Lakhs in the fiscal year ended March 31, 2021 to ? 4357.53 Lakhs in the fiscal year ended March 31, 2022. Cost of material consumed as the company has start purchasing the raw material directly from the OEMs at lower cost as compared to their distributors because of which the cost of goods sold is reduced.
Changes in inventory of finished goods, work-in -progress, stock-in trade
Changes in inventory of finished goods increased by ? 830.00 Lakhs and 273.05 % from ? (303.97) Lakhs in the fiscal year ended March 31, 2021 to ? 526.02 Lakhs in the fiscal year ended March 31, 2022. The reason for increase in change in inventory is due to increase in operations of the company.
Employee Benefit Expense
Employee Benefit Expenses decreased by ? 0.60 lakhs and 0.28 % from ? 217.00 Lakhs in the fiscal year ended
March 31, 2021 to ? 216.40 Lakhs in the fiscal year ended March 31, 2022.
Finance Costs
Our finance costs decreased by ? 65.35 lakhs and 23.37% from ? 279.57 Lakhs in the fiscal year ended March 31, 2021 to ? 306.54 lakhs in the fiscal year ended March 31, 2022. The Decrease in finance cost of the company is decreased consequent to decrease in the long-term borrowings of the company.
Depreciation and Amortization Expense
Depreciation in terms of value decreased by ? 20.57 lakhs and 16.14 % from ? 127.47 Lakhs in the fiscal year ended March 31, 2021 to ? 106.90 lakhs in the fiscal year ended March 31, 2022.
Other Expenses
Other Expense was decreased by ? 10.63 Lakhs and 7.60% from ? 139.81 Lakhs in the fiscal year ended March 31, 2021 to ? 129.19 Lakhs in the fiscal year ended March 31, 2022. Other Expense was decreased primarily due to decrease in the Bad Debts of the company by ? 15.48 from ? 16.67 in Fiscal 2021 to ? 1.19 Lakhs Fiscal 2022.
Profit before Interest, Depreciation and Tax
Profit / Loss before Interest, Depreciation and Tax has increased by ? 80.68 lakhs and 73.01 % from ? 110.51 Lakhs in the fiscal year ended March 31, 2021 to Profit of ? 191.19 Lakhs in the fiscal year ended March 31, 2022. Profit before exceptional & extraordinary items and Tax was increased due to increase in revenue from operations and increase in profit margins.
Net Profit after Tax and Extraordinary items
Net Profit has increased by ? 107.52 Lakhs and 159.80% from ? 67.29 Lakhs in the fiscal year ended March 31, 2021 to profit of ? 174.81 Lakhs in the fiscal year ended March 31, 2022. The increase in net profit margin is increased due to increase in the business & operations.
INFORMATION REQUIRED AS PER ITEM (II) (C) (I) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS:
Except as described in this Draft Red Herring Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.
Other than as described in the section titled "Risk Factors" beginning on page 24 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
Income and sales of our Company on account of sale of panels.
Our Company has not followed any unorthodox procedure for recording sales and revenues.
Our Companys future costs and revenues will be determined by demand/supply situation.
Our Companys future costs and revenues will be determined by competition, demand/supply situation, Indian
Government Policies, foreign exchange rates and interest rates quoted by banks & others.
Increases in our revenues are by and large linked to increases in the volume of business.
The company is operating in manufacturing of electric power control and its various grades, Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 93 of this Draft Red Herring Prospectus.
Our Company has not announced any new services and product and segment / scheme, other than disclosure in this Draft Red Herring Prospectus.
Our Companys business is not seasonal. However, as per our past trend the revenue from operations in quarter 3 & 4 is comparatively more than quarter 1 & 2 depend on countrys economy situation and inflation.
For revenue bifurcation from Top 10 Customer please refer the chapter titled "Our Business" on page 123 of Draft Red Herring Prospectus.
We do face competition from existing and potential competitors which is common for any business. We have, over a period of time, developed certain competitive strengths which have been discussed in section titled "Our Business" on page 105 of this Draft Red Herring Prospectus.
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