Just few additions to Donald Exhaustive pointers from my side:
1 While 5G opprotunity may turn out to be large, it would be one time demand and not recurring business.
2 The company decided to invest specifically in R&D efforts and in process to set up dedicated R&D facility in Solan
3 Majority of company sales is customised and hence they need to understand client requirment and accordingly set production paramters and equipment. Due to inhouse capabilities and understanding, even the manufacuturing equipment it installed are kind of customised and has great amount of input from management. Hence, replacing that set-up with only financial resource to replicate would be very difficult.
4 The customer trust Shivalik for quality, reliability and transparency. In history of operations, there are no instance when client has faced any production break down. Only one instance, where management of Shivalik got early warning, they ensure that critical inputs are delivered to client and one of director personally delivered those input to client factory.
5 The company managment is confident about maintain contribution margin even despite high volatality in input materials. Most of agreements have clause of passing on volatility in raw material to customers. Hence the company can manage the margin.
6 The current infrastructure can support one more buidling. Post that expansion the company many need to look for new land for development. They have in past acquired land for expansion. However, that land lost material portion of approach from highway due to road cutting and hence now not suitable for factory set up. The managment is in process to sale that land and hence same land is appearing as invesment i balancesheet.
7 The company has been utilised new technoloies and state of art equipments along with automation to minimise product standard deviation.
8 There was visible change in top managment attitude towards delegation of power among second line of professional and new generations family members. The recent expansion in capacity involved significant involvement from second generations of family which is a positive gesture for future business growth in my understanding.
Disclosure: Among my top 2 holdings. My view may be positively biased due to my holding. Not a SEBilI registered advisor. Not recommending any investment action.
Subscribe To Our Free Newsletter |