Shivalik FY24 AGM Notes 26 September 2024 10:30 AM at Solan
Last year was sales growth slow but business was not “unexciting”. There were many new products which are under developments
The company is focussing to make manufacturing process to meet the best in the global market. As per one client, the development of manufacturing process and quality control tools/machine used by Shivalik are superior and better then what the client has been using inhouse. Automation/Robotics usage has increased flexibility of manufacturing process (previously only one product standard could be provided to machine, now multiple dimensions can provide to manufacturing machine which can result different dimension product simultaneously from single machine. Further, the data is collected online from the final output which assist company to understand problem area. Further, the robotic machine used in manufacturing filter out all product which are not matching the final dimension without human intervention resulting reduction in rejection rate/ product recall due to defective quality.
Part of reason of slow down in FY24 could also be attributed to Geo-political development. Previously, the company was working European and US client’s China team to provide support to new development. However, most of the players have now decided to shift development of new products to other geographies in proximity to their area of operation. That resulted in new team getting involved in development and also resulted 9-12 months delayed in new project implementation.
The company is also looking at passing on management of business to new generation. Mr. Kabir and Mr. Anand inducted in Board of Directors are executive directors. Mr Anand would look at business development and marketing while Mr. Kabir would be responsible for research, production and development of manufacturing process. Mr. Sumer would also be actively involved in Finance and managing relationship with Investor community. Mr. Sandhu who has been involved with inception of the company and currently chairman is likely to move out of Board of director. Mr. Ghumman would continue to be board and provided guidance to the new team.
Research efforts: The company has created a team of specialist to guide research efforts. Currently, there are four members which is likely to expanded further. The company is also looking at filing a new patent application from past efforts of its research team. They are also evaluating forward integrating and increase value addition in existing products, specifically in shunts. While, that is likely to increase the turnover, due to higher value addition, growth in margin is expected to higher than revenue growth.
The company has implemented new line which is likely to increase automatic (robotic) quality checks of 1.5-2 million parts per month. This new line is expected to commence production from November 2024.
Innovative Clad: The JV has now turn around. During FY24, the company accumulative losses were adjusted and it is likely contributed positively for future growth of the business.
Metalor MOU: The company was in discussion with Metalor for JV to manufacture new products in silver current. However, the subsequent discussion among the JV partners resulting in differing viewpoints on technology support and market access. As per Management, proposed terms by the JV partner were not match with Shivalik Financial expectation. While, discussion is still underway, Shivalik is cautiously optimistic and carefully evaluating finalisation of JV terms.
Growth driver: US and European EV Automobile industry is stabilised and they are expecting increased order during FY25 and FY26. Although, the EV demand is likely to revive, the management feel, that it would be still lower than FY22 peak achieved by EV industry in developed market. Smart Meter, Domestic EV/Hybrid, Domestic ICE shunt supply, Increased demand form Domestic Data Centre and increased share of higher value-added products (particularly EV shunts) would be main drivers for growth in medium term. While the market dynamics can delay stated goal of Rs 1600 Cr turnover, they are putting all efforts to achieve the stated goal.
Niche Engineering along which state of art technology in electronic industry would be key industry where company intend to develop new products beside current market. That industry all ingredient for high growth and company is very well placed with required skill set to take full advantage of the opportunity, in view of management.
Disclosure: Shivalik Bimetal is among Top 3 holding for me. My view may be biased due to my investment. I am not suggesting any investment action. I am not SEBI registered advisor. I may increase/decrease/exit from my investment in the company without informing forum. There may be communication error from my side.
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