Shivalik Bimetal Controls Ltd Management Discussions.


According to International Monetary Fund (‘IMF), global growth is projected to rise to 3.9% in 2018 and 2019, closer to the long-term growth trend of 4%. The IMF estimates that the growth of more than 1.5% in 2017 in each of the worlds seven biggest economies—the US, China, Germany, Japan, France, the UK and India— will provide an impetus to the world economy to achieve more robust growth in 2018.

In 2017, a decade after the global economy spiralled into a meltdown, a revival became visible. Every major economy expanded and a growth wave created jobs. This reality was marked by ongoing Euro-zone growth, modest growth in Japan, late revival in China and improving realities in Russia and Brazil leading to an estimated 3.7% global economic growth in 2017, some 60 bps higher than the previous year. Global growth forecasts for 2018 and 2019 were revised upward by 20 bps to 3.9%, reflecting improved momentum due to the impact of tax policy changes in the US.

Indian Economy

On the domestic front, despite the prevailing after effects of demonetization and the implementation of Goods & Services Tax (GST), India continued to be the fastest growing economy. In FY 2017-18, Indias GDP at constant prices is expected to grow by 6.6% as compared to 7.1% in the previous year, as per second advanced estimates issued by the Central Statistics Organization (CSO). Acceleration in manufacturing, rising corporate sales growth, a pick-up in capacity utilisation, strong activity in the services sector and a record agricultural harvest helped to boost growth.

The year under review was marked by various structural reforms by the Government. In addition to GST introduction, the year witnessed significant resolution of problems associated with bank non-performing assets, FDI liberalization, bank recapitalization and privatization of coal mines. After remaining in negative territory for a couple of years, export growth rebounded during 2016-17 and strengthened in 2017-18; foreign exchange reserves rose to USD 414 billion as on January 2018. World Bank projected Indias economic growth to accelerate to 7.3% in 2018-19 and 7.5% in 2019-20. Strong private consumption and services are expected to continue to support economic activity. Private investment is expected to revive as soon as the corporate sector adjusts to the GST. The recapitalisation package for public sector banks announced by the Government of India is expected to resolve banking sector Balance Sheets, enhance credit availability and spur investment. (Source: CSO, economic survey 2017-18 IMF, World Bank).


"Shivalik" is engaged in the business of manufacturing & sales of Thermostatic Bimetal / Trimetal strips, components, EB welded products, Cold Bonded Bimetal Strips and Parts. The Companys products are exported to over 50 Countries around the world. In particular, the Company achieved its targets in the FY 2018-19. SHIvALIK is catered to broad spectrum of applications which includes Switchgears, Energy Meters, Industrial, Electrical applications, Automotive & Electronic Devices. Our growth is directly connected with the Electrical, Electronics and Automotive Industries.

Indian electrical and electronics industry has witnessed a record double-digit growth of 12.8% in 2017-18. Although higher imports still plague the industry, policy changes and various initiatives undertaken by the Government and industry are eventually showing signs of revival in this sector. {Source by Indian Electrical and Electronics Manufacturers Association (IEEMA)}. The production and sales data is collected from its member organizations, which represent 90 percent of the entire sector.

The government is procuring smart and prepaid meters to be deployed across the country. It has urged electronic meter manufacturers to scale up production in India, as it plans to shift all connections to smart prepaid meters over the next three years. Energy Efficiency Services Limited (EESL) has floated two global tenders for procuring a total of 10 million smart meters.

The industrys record performance is attributed to Governments schemes like DDUJGY, IPDS and Saubhagya where the country is racing to provide electricity to households in the villages. The government unveiled Rs.16,320 crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) in September to provide electricity connection to around 4 crore families in rural and urban areas by December 2018. Joining hands with government for this cause, IEEMA alongwith ‘REC has created a North East Cell to give impetus to this growth by emphasizing on distribution in North East.


We are one of the leading manufacturers of Thermostatic Bimetal / Trimetal strips, components, EB welded products, Cold Bonded Bimetal Strips and Parts globally. We provide a complete solutions/package to the customer, not only of strips, but also of ready-to-use components.

Our vision for our business is "To earn our clients trust and maximize the value of their business by providing solutions using our knowledge and technology." We seek to emphasize on our core values of being passionate about our clients success, treating each person with respect, being global and responsible, and maintaining unyielding integrity in everything we do.


The company posted its highest ever production, shipments, revenue and EBIDTA during the FY 2017-18. For the FY2017-18, the company revenue increased by 29% from Rs. 12,556.99 lakhs to Rs. 16,167.97 lakhs. An increase in realizations and sales volumes are the prime drivers of this performance. The company continues its focus on pruning costs by improving yields, productivity and optimized the mix and sourcing of key inputs to withstand the volatile pricing environment.

The company was able to achieve encouraging progress on key strategic initiatives like automation and logistics optimization. This cost optimization initiatives helped the company report an EBITDA of Rs. 2,977.46 Lakhs for the year, which grew by 41% y-o-y. The company registered a net profit after tax of Rs. 1,598.69 Lakhs which grew by 85% y-o-y. Product Group wise share in turnover for the last two years (% of value)

Particular FY 2017-18 FY 2016-17
Thermostatic Bi-metal/Tri-metal Strips & Parts 56.50 67.58
Shunt (Resisters) 43.05 31.26
Job work for Indian Ordinance 0.45 1.16


Revenue Analysis: (Rs. In Lakhs)
Particular FY 2017-18 FY 2016-17 CHANGE CHANGE %
Domestic Turnover 7,728.29 6,569.95 1,158.34 17.63
Export Turnover 8,255.82 5,984.09 2,271.73 37.96
Total Turnover 15,984.11 12,554.04 3,430.07 27.32
Other Operating Revenues 183.86 2.95 180.91 -
16,167.97 12,556.99 3,610.98 28.76

Product wise quantity Break-up (MT):

PRODUCTS FY 2017-18 FY 2016-17 % GROWTH
Bimetal 576 538 7.06
Shunt 533 308 73.05
Total 1109 846 31.09

The Company performance is relatively strong with the improvement in absolute volume in the export market and product mix. The total sales volume increased by 31% vis--vis the previous year. The company explored opportunities in the export market in addition to developing existing markets. The revenue was higher by 29% vis--vis the previous year mainly on account of 31% volume growth.

Own Funds (Rs. In Lakhs)
Particular FY 2017-18 FY 2016-17 CHANGE CHANGE %
Net Worth 8,526.76 7,124.16 1,402.60 19.69

Net Worth has increased by 19.69% from Rs. 7,124.16 lakhs in FY 2016-17 to Rs. 8,526.76 lakhs in FY 2017-18. The book value per share has increased to Rs. 22.20 in FY2017-18 from Rs. 18.55 in FY 2016-17.


The economy was able to overcome the short term challenge of GST resulting in a rebound in the last quarter. The outlook is optimistic as all major economic indicators appear to be in good health. Inflation is range-bound and the consumer sentiment is positive.

The outlook for SHIvALIKs business is positive due to following Government reform initiatives like:

Smart Cities: The Indian government launched the Smart Cities initiative in collaboration with States and Union Territories. The mission intends to drive economic growth and improve living standards. The Smart Cities mission will drive city improvement (retrofitting) and city extension (Greenfield development). This initiative will cover 100 cities with the Union government allocating Rs. 48, 000 crore over five years.

Make in India: The ‘Make in India initiative was launched with the objective of making India a global manufacturing hub. The initiative is expected to boost entrepreneurship in manufacturing, services and infrastructure sectors. The Indian Government set up ‘Invest India as a national investment promotion and facilitation agency under the initiative.

Electric Vehicle Market: The global electric-vehicle markets are amped up and continue to surge ahead in top gear. According to Frost & Sullivans recently released "Global Electric vehicle Market Outlook 2018," global sales are poised to climb from 1.2 million in 2017 to 1.6 million in 2018 and further upwards to an estimated 2 million in 2019. Its not all smooth driving though as the Ev industry needs to overcome major challenges related to battery technology and charging infrastructure, both of which have failed to match the cracking pace set by Evs.

Initiatives for production of electric Vehicles: The Government started Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme which provides incentives for purchasing electric vehicles. Government is releasing tenders to increase charging centers to the Evs in the country. Karnataka approved Electric vehicle and Energy Storage Policy 2017.

Considering the above government reforms the company is quite hopeful with the opportunities available in the following areas:

1. Smart Meter: The Company has developed products which are an integral part of the meter.

2. Automotive application: We have developed resistors which are used in high power low ohmic metals. Power resistors are used for automotive applications such as electric power steering, power window modules & IBS (Intelligent Battery System) of Electric vehicles.

3. Snap Action disc: Company is venturing into niche application such as OLP (overloaded protectors) and thermostatic Bimetals of various industrial and home appliances. We are developing disc grade Bimetals for such applications. We are expecting the aforesaid activities to turn as another profit centre for us in the coming years. We have been continuously strengthening and updating our manufacturing capacity to cope up with the ever increasing market demands.

Opportunities & Threats Opportunities:

The Government is focused on increasing the power supply to villages.

Expansion of key industry sector like power, steel, petrochemicals, telecom and others.

Per capita consumption of energy being relatively low, the growth potential for this industry in medium and long term is high.

Governments plan to convert traditional meters into smart meters and Replacement and retrofitting programmes.



Change of technology.

Any unfavorable change in Govt. Policies may affect export competitiveness.

Market volatility.

Risks & Concerns

Risk Management Policy has been adopted by the Board to review and mitigate risks relevant to environmental, operational and business risks to safeguard its interest. It ensures sustainable growth by implementing a proactive approach in reporting, evaluating and controlling/resolving risks associated with the business of the company. In order to achieve this, the policy establishes a structured and disciplined approach to Risk Management, including the development of the risk areas, so as to guide decisions on risk related issues.

The Board has delegated responsibility of overseeing Risk Management frame work to the Audit Committee. Audit Committee of the Company is regularly monitoring the environmental, operational and business risks. The company has internal audit systems which assesses the effectiveness of internal controls, risk identification and mitigation processes prevailing in the company. Your company has also formulated a Foreign Exchange policy to mitigate the risks attached while dealing in fluctuations in Foreign exchange in both Imports as well as Exports. Audit Committee of the Board of Directors also reviews the internal audit reports and takes appropriate actions w.r.t deviations, if any.

The various heads of operations have regular interactions and communications to keep themselves abreast with the developments in the market, products, competition and other relevant areas.

Internal Control System and their Adequacy

SHIvALIK has an adequate system of internal controls in place which has been designed to provide a reasonable assurance with regard to maintenance of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting. Company has documented procedures covering all financial and operating functions.

Company has robust internal audit programme, where the Internal Auditors, an independent firm of chartered accountants, conduct a risk-based audit with a view to not only test adherence to laid down policies and procedures but also to suggest improvements in processes and systems. Internal audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of such recommendations.

Occupational Health & Safety

SHIvALIK gives great importance to all the matters related to Health, Safety and Environment and ensures compliances of all statutory regulations. Training of employees on emergency response, firefighting, rescue and first aid are some of the regular features at manufacturing sites.

Occupational Health & Safety is an area concerned with protecting the safety, health and welfare of employees engaged in the company. The goals of occupational safety and health programs include to foster a safe and healthy work environment. Occupational Health & Safety has been recognized as an integral and key part of the Companys Business Process. The management believes that people working with the organization are of key resource for the success of the Organization. The sincere efforts put in by the employees have translated in to Quality improvements, Productivity improvements and Cost reduction etc. Management firmly believes in developing and nurturing its human resources and improving their talents which subsequently help in the growth of the Company. Proper care is taken for safety, health and welfare of the employees. The Company ensured employee safety through investments in pollution mitigating equipment, the selection of safe processes, adequate safety training and provision of safety equipment. Our aim is to remove unsafe situations and practices by any/all pre-emptive steps required. For the safe return of the employees to their homes all precautions are taken to avoid accidents.

Human Resource and Industrial Relations

All out efforts are made to quickly resolve all outstanding issues beforehand so that they do not escalate into major disagreements. Your company has earned a good standing over the years and there are zero contentious issues pending as on date. The organization maintains harmonious relations at all levels within the company and employees are well motivated round the year to meet the goals set for them. Your Directors wish to place on record the deep sense of appreciation for the contributions made by the employees.

Your Company is continuously striving to create appropriate environment, opportunities and systems to facilitate identification, development, and utilization of their full potential and inculcating a sense of belongingness.

Your Companys industrial relations continued to be harmonious during the year under review.

Cautionary Statement

Statements in the "Management Discussion and Analysis" describing the Companys objectives, projections, estimates and expectations or predictions may be forward looking statement within the meaning of applicable securities laws and regulations. Actual results could differ substantially and materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions effecting demand/supply and price conditions in the domestic and overseas markets in which the company operates, currency (forex) fluctuations, changes in government regulations, tax laws and other statutes and other incidental factors.