Some interesting takeaways from 2022 AR:
- “Keeping in view the contribution made by Mr. N.S. Ghumman (DIN: 00002052) for sustaining the growth of the business of the Company futuristically, with the recommendation of the nomination and remuneration committee, the Board of Directors in their meeting held on 29th August, 2022, decided to ratify the existing remuneration of Mr. N.S. Ghumman, Managing Director of the Company for a further period of three years w.e.f 01st January, 2022″ My note: Looks like ghumman ji will be around for 3 years at least
2.RESOLVED FURTHER THAT the ratification of the existing remuneration (amount of Rs. 3.00 Crore, as already approved by the shareholders in its meeting held on 11th September, 2019) of Mr. S.S Sandhu (DIN: 00002312), as a Chairman and Whole time Director of the Company for further period of three years w.e.f 1st January, 2022. My Notes: Remuneration being fixed at existing remuneration for 3 years shows that promoter are not increasing their remuneration despite much larger capex coming on stream & much more profit growth. Promoter remuneration as % of profits should come down in next 3 years. - Mr. S.S. Sandhu enjoys good health and is actively associated in the development of the Company. The Board recommends the resolution to be passed as special resolution by the Shareholders as per the requirements Companies Act, 2013. My Notes: essentially co is asking shareholders to allow Mr Sandhu to hold on as chairman despite turning 70 years in 2024 as a special resolution (for 5 years since 2022). Music to ears of shareholders.
- Co is expanding related party transaction limit from 30 lakh to 4 cr for being able to pay Mr Kabir Ghumman. Mr. Kabir Ghumman is a qualified Engineer holding Bachelors-Mech. Engineering. He was made responsible for the supervision of all technical and process engineering aspects of the Company at the manufacturing unit. With his exposure and experience in the designing and optimisation of use of machinery has developed good understanding of manufacturing processing. His scope of work covers his full involvement in the mechanical engineering aspects of the Company at plant.”
- Steps taken to improve profitability: ” Focus on high quality performance delivery and good relationship with existing customers to generate rapid new order flows. Widening of customer base for growth of business both from private and public sector. Use of the Equipments of latest technology for enhancing quality and reducing time.
- Updates on Unit 1: Construction of the Building and equipment installation on the adjoining land has been completed and commercial production has commenced.
- Updates on Unit 4: Construction of the UNIT-IV Building is completed, and the Phase-wise equipment installation/commissioning process is expected to be fully operational by the end of September 2022.
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there are some very good details on the capital goods that shivalik makes for inspection, improvement of the EBW process : “Further improvements made in custom-built machines for automatic inspection of components;
• Additional Automated systems for high-speed measurement and dimensional checks;
• In-house development and building of additional electron beam welding machines;
• High-Speed automatic packing machines for electronic parts – Further improvements made in production
throughput.
• Design and building of custom machines for measuring and calibrating shunt resistors.
• Improved heat treatment process to improve performance of resistors
• Installed Energy efficient Vacuum systems” - Global Smart meter opportunity: The global smart electric meter market size is projected to reach USD 36.00 billion by 2028, exhibiting a CAGR of 8.1% during the forecast period
- Indian smart meter opportunity: Smart Meter National Programme aims to replace 25 crore conventional meters with smart meters in India. Smart meters are connected through a web-based monitoring system which will help to reduce commercial losses of utilities, enhance. revenues and serve as an important tool in power sector reforms. According to the recent data released by the National Smart Grid Mission, Ministry of Power, 3.73 million smart meters have been installed across the country out of the total allocated quantity of 11.16 million smart meters as of January 2022
- EV Opportunity: The global electric vehicle market size is projected to grow from 4,093 thousand units in 2021 to 34,756 thousand units by 2030, at a CAGR of 26.8%. . A report by India Energy Storage Alliance estimated that the EV market in India is likely to increase at a CAGR of 36% until 2026
- Shunt Resistors comprised 51.94% of total revenues and grew by 69.73 % YoY. Thermostatic bimetal/trimetal strips comprised 46.24% of total revenues and grew by 48.64% YoY
- Expansion is on going to meet the demand that is emerging as the world moves rapidly into smart meters, EVs, EVs charging stations, intelligent battery systems, solar energy farms with battery storage and also demands from the 5G telecom networks.
Overall looks like co is gearing up to scale up shunts division even more. We should try to understand in AGM exactly how and to what extent Shunts can be used in new applications like “intelligent battery systems, solar energy farms, 5G telecom networks”.
one of most surprising new details for me is extent to which shivalik might be backward integrated into capital goods/machined used in the manufacturing process. Further providing a competitive advantage against lower value shunt makers. Investors must drive a fine balance between understanding this process/capital knowhow knowledge & allowing the co to maintain its competitive advantages by NOT divulging such details to anyone in public including investors.
disc: INvested, biased
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