Published on: Wednesday, 07 August 2024 ● 9 Min Read
NEW DELHI, Aug. 7, 2024 -- At a meeting held on August 6th, the Board of Directors of Shivalik Bimetal Controls Ltd. (SBCL) released the financial results for Q1FY25. As a global leader in thermostatic bimetal/trimetal strips, shunt resistors, and silver contacts, SBCL navigated a challenging global market environment marked by commodity price fluctuations and geopolitical tensions. The Company demonstrated resilience and continued to drive positive volume growth.
Q1FY25 Financial Performance Summary:
Q1FY25 Highlights from Shunt Resistor Sales:
The strong growth in Europe, Asia, and India has mitigated the reduction in sales from the Americas to a great extent, maintaining Shivalik's robust financial health and reaffirming its strategic focus on having a diversified market presence.
Financial Performance:
(Rs. In crore) (Standalone Figures)
Key Figure | Q1FY2025 | Q1FY2024 | Change |
Total Income | 107.22 | 113.07 | -5.18 % |
Profit before tax | 21.75 | 26.77 | -18.75 % |
PBT as % of Sales | 20.29 % | 23.68 % | (339 bps) |
Profit after Tax | 16.30 | 20.23 | -19.41 % |
PAT Margin | 15.21 % | 17.89 % | (268bps) |
Topline Performance and Demand: The Q1FY25 financial performance reflects a complex interplay of external market conditions and strategic operational decisions. The total income decreased by 5.18% to ₹107.22 Crore from ₹113.07 Crore in Q1FY24, reflecting the impact of lower commodity prices for input metals and market fluctuations. This reduction in raw material costs, coupled with market volatility, has contributed to the overall decrease in sales revenue. This decline was partially offset by increased volumes in both bimetal/trimetal strips and shunt resistors, indicating continued underlying demand strength for the Company's products.
Profitability: Profit Before Tax (PBT) fell by 18.75% to ₹21.75 Crore compared to ₹26.77 Crore in Q1FY24. The PBT as a percentage of sales decreased by 339 basis points to 20.29%. Profit After Tax (PAT) reduced by 19.41% to ₹16.30 Crore from ₹20.23 Crore in Q1FY24, reflecting overall pressure on profitability due to increased operational costs amidst fluctuating market conditions. The PAT margin dropped by 268 basis points to 15.21% compared to 17.89% in Q1FY24, driving the Company's focus on cost management to maintain profitability in a volatile market environment.
The decline in profitability reflected in Q1FY25 is due to several factors. Increased Costs of Goods Sold (COGS) was the main contributor to the profitability drop alongside marginal rise in operational expenses, including higher utility costs and maintenance expenses. In response to these challenges, Shivalik is strengthening its cost management strategies to optimize operational efficiencies, effectively manage input costs, and ensure sustainable growth despite volatile market conditions. Furthermore, Shivalik anticipates that as the Company transitions towards producing more complex subassemblies using their components to deliver value-added solutions, coupled with future general selling price adjustments that the market can absorb, these measures should offset the current cost loads.
Regional Performance: The Company showed resilience through positive volume growth and strategic market expansion in key regions of Europe, India, and Asia (excluding India).
Management Commentary:
Mr. N.S. Ghumman, Managing Director of Shivalik Bimetal Controls Ltd., commented:
"Over the past year, we have diligently focused on adapting to market fluctuations and enhancing our strategic initiatives to drive sustainable growth. Our Q1FY25 performance underscores the effectiveness of these efforts, particularly in the European market where our efforts in shunt resistor sales are taking root. Additionally, our strategic expansion in other high-growth markets and the rising long-term demand for electric vehicles (EVs) position us favourably across various regions.
Our commitment to research and development is key to our success. We specialize in niche and critical products that require technical expertise and have high value in segments like smart meters, Battery Management Systems (BMS), and electrification. With positive market pick-ups in Europe, Asia, and India for shunt resistors, especially as the EV market grows, our ongoing R&D initiatives aim to add further value through forward integration for OEMs. We are also focused on improving automation, operational efficiency, and technological processes for our high-precision products. These efforts ensure we remain at the forefront of innovation and continue to deliver superior value to our clients."
CFO, Mr. Rajeev Ranjan, added:
"Our financial performance in Q1FY25 demonstrates the robustness of our business model amidst a challenging market environment. Despite a 5.18% decrease in total income to ₹107.22 Crore, our strategic focus on volume growth yielded an 8.58% increase in product volumes, underscoring the resilient demand for our products. This growth is a testament to our market positioning and the effectiveness of our expansion strategies in Europe, Asia, and India.
The decline in profitability, with PBT falling by 18.75% to ₹21.75 Crore and PAT reducing by 19.41% to ₹16.30 Crore, reflects the impact of increased COGS also affecting our margins. Looking forward, we are enhancing our R&D capabilities and operational efficiencies, positioning us for long-term growth. We are implementing manufacturing cost management to improve our margins.
Looking to the future, our market diversification strategy is yielding positive results, particularly in the European market, where shunt resistor sales improved by 134.40% off a modest base. This growth, along with significant gains in Asia, demonstrates our ability to capture high-growth segments and adapt to regional market dynamics. While sales in the Americas faced challenges, we are optimistic about a gradual recovery as the EV market stabilises and demand picks up."
Shivalik Bimetal Controls Ltd.
Founded in 1984, and headquartered out of New Delhi, Shivalik Bimetal Controls Limited is a process and product engineering specialised business based in India. It manufactures and sells thermostatic bimetal/trimetal strips for switching components used in electrical, electronics, automotive, and industrial applications. The Company also makes shunt resistors for use in the high-growth automotive and industrial equipment segments. The rising demand for switchgear, battery management and smart metering systems also conveys solid long-term prospects for Shivalik's product lines. With its unique business model based on proprietary bimetal technologies and niche solutions that OEMs demand, Shivalik thrives in an industry with high entry barriers. Today, as a valued vendor, the Company is making a mark in supplying high-quality bimetals and shunt resistors to the fast-emerging electric vehicles and customisable smart meters of the future,
Shivalik's highly experienced management has led the Company to prominent ownership in technology and applications. Its solid balance sheet, combined with prudent capital management, drives Shivalik's robust growth potential. With plants in Chambhaghat and Kather, Solan, operated by a team of 808 vastly skilled people, Shivalik serves more than 125 clients globally.
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