Gala Precision Engineering Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction to Gala Precision Engineering IPO :

Gala Precision Engineering is a leading manufacturer of precision components specializing in technical springs, including disc and strip springs (DSS) with wedge lock washers, coil and spiral springs (CSS), and bespoke fastening solutions (SFS). It serves original equipment manufacturers (OEMs), Tier 1 suppliers, and channel partners.

Its operations are divided into two primary divisions: the Springs Technology Division, which produces DSS, including wedge lock washers (WLW) and CSS, and the SFS Division, which manufactures anchor bolts, studs, and nuts. Gala’s DSS products are utilized in a range of industries, including renewable energy, railways, automotive, off-highway vehicles, heavy machinery, and electrical and power equipment.

With a strong customer base both within India and internationally, Gala Precision Engineering exports account for over 35% of our total revenue. It operates two manufacturing facilities, both located in Wada, Maharashtra.

IPO Details:

Objectives of Issue:

• Setting up a new facility at Vallam-Vadagal, SIPCOT, Sriperumbuddur, Tamil Nadu for manufacturing high tensile fasteners and hex bolts;
• Funding capital expenditure requirements towards purchase of equipment, plant and machinery at Wada, Palghar, Maharashtra;
• Repayment/ prepayment, in full or part, of certain borrowings availed by the company; and
• General corporate purposes.

Key Strengths:

• Long Standing with Customers- The company caters to over 175 clients across 25 countries. Among these, the top 10 customers have been with the company for an average of 8 years, with the longest relationship spanning 17 years and the shortest 4 years. These long-standing partnerships reflect strong customer confidence in the company's quality products and services.

• Core Components for Renewable Sector- The company's products are utilized across various sectors, including renewable energy, railways, automobiles, off-highway vehicles, heavy machinery, and electrical power equipment. The company holds a substantial position in the domestic DSS market for the renewable industry, with approximately 70% market share. Increased government emphasis on the renewable sector is expected to drive the company's growth.

Risks:

• Concentrated Manufacturing Facility- The company has 2 manufacturing facilities and both facilities are located in Wada, Maharashtra. Any disruption in this area due to unforeseen conditions could affect the manufacturing capability of the company which in turn would affect the business operations.

• Changes in Trade Policy - Export destination countries apply varying duties on company’s products, which could rise and negatively impact its business and financial performance. Additionally, free trade agreements and changes in import policies might intensify competition or put the company at a disadvantage relative to other manufacturers. Economic slowdowns and modifications to bilateral agreements involving India could also affect its
• Existence of Legal Suit- The company is currently involved in a patent infringement case related to wedger lock technology washers. This product has accounted for over 5% of the company’s revenue over the past three years. The plaintiff has sought damages of Rs 20 million, with the possibility of increasing the claim based on future revenue from the disputed product. The case is still pending, and an adverse ruling could impact the company’s profitability.

Financial Snapshot:

Debt to Equity Ratio - The debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity. It is a measure of the degree to which a company is financing its operations with debt rather than its own resources.

KPI comparison with Industry Peers