Quadrant Future Tek Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

Quadrant is a research-driven organization specializing in the development of next-generation Train Control and Signalling Systems under the Indian Railways' KAVACH project. This initiative is designed to ensure the highest standards of safety and reliability for rail passengers. Additionally, the company operates a state-of-the-art Specialty Cable Manufacturing facility equipped with an Electron Beam Irradiation Centre. These specialty cables are extensively utilized in railway rolling stock and the naval defense industry. The facility also features comprehensive infrastructure for the production of solar and electric vehicle (EV) cables.

The company’s manufacturing, testing, research, and development facility for specialty cables, as well as hardware for the Train Control and Signalling division, is located in Village Basma, Tehsil Banur, District Mohali. Quadrant provides specialty cables tailored for industrial applications where fire safety, lightweight materials, and long-term performance are critical. These cables also find significant use in solar and wind installations, meeting demands for thermal resistance, durability, and extended warranties.

As of September 30, 2024, the Specialty Cable division has an installed production capacity of 1,887.60 metric tonnes, consistent with the capacity on March 31, 2024, and higher than the 1,638.00 metric tonnes in 2023 and 1,500.72 metric tonnes in 2022. The capacity utilization rates for these periods were 25.03% (non-annualized), 49.42%, 54.26%, and 57.62%, respectively.

Quadrant has also established a dedicated Railway Signalling and Embedded Systems Design Centre focused on developing advanced Train Control Products and Solutions. The company is actively working on systems such as Train Collision Avoidance and Electronic Interlocking, both integral to the KAVACH Automatic Train Protection System, which aims to enhance safety and capacity for Indian Railways. The indigenously developed Train Collision Avoidance System leverages radio transmission and LTE technology, adhering to SIL-4 safety standards and ensuring interoperability with competing systems. This initiative is part of the RDSO’s efforts under the Ministry of Railways to elevate safety and operational efficiency.

IPO Details:

Objectives of Issue:

• Funding long-term working capital requirements of the Company;
• Capital expenditure for the development of Electronic Interlocking System;
• Prepayment or repayment of all or a portion of outstanding working capital term loan availed by the Company; and
• General corporate purposes.

Key Strengths:

• Exclusive Memorandum of Understanding with Railtel– The Company has signed a Memorandum of Understanding (MoU) with RailTel Corporation of India Limited, a Government of India enterprise, to establish a framework for collaboration. This MoU focuses on (i) exploring opportunities under the agreement, (ii) implementing KAVACH as an Automatic Train Protection System in India and internationally, and (iii) expanding the scope to align with railway systems in other countries. Quadrant has partnered exclusively with RailTel to deliver targeted opportunities related to KAVACH. This agreement qualifies the Company as an OEM to supply and implement KAVACH equipment for RailTel's projects in India and abroad.
• Diverse range of Power and Control cables– The company is among the select manufacturers in India accredited by RDSO, DGQA, and the Indian Register of Shipping, with in-house expertise in producing and supplying high-quality cables. Its offerings include single-core and multi-core control and power cables, as well as signaling cables for railway coaches, locomotives, and EMUs. Additionally, it supplies screened and unscreened power cables for naval ships. It specializes in providing a diverse range of cables tailored to the unique needs of the railway and defense sectors, prioritizing fire safety, lightweight designs, and long-term performance to meet the stringent requirements of its customers.
• Global emergence of market for Speciality cables in renewable energy and electric vehicles- The demand for electric cars, two-wheelers, and three-wheelers has surged in recent years, driven by government incentives, declining battery costs, and the launch of innovative EV models by domestic and global manufacturers. New energy vehicles, with their reliance on advanced electronic and high-voltage systems, require specialized power cables to ensure safety and performance. Similarly, India's solar energy sector has become a critical player in grid-connected power generation, contributing to sustainable development goals and energy security. Specialized cables, designed to withstand harsh conditions like UV exposure, extreme temperatures, and chemical corrosion, are indispensable for solar power systems, ensuring durability and safety.

Risks:

• Concentrated Manufacturing Facility– The company operates a single manufacturing facility located in Basma, Mohali, Punjab, equipped with advanced machinery, modern technology, and an automated PCB assembly line. This facility supports both business divisions—Specialty Cables and Train Control & Signalling—and serves as the backbone for manufacturing and supply operations. However, the facility is exposed to operational risks, such as equipment breakdowns, reduced efficiency, obsolescence, natural disasters (e.g., earthquakes, floods, and fires), man-made incidents (e.g., terrorism and power outages), and industrial accidents. Such events could disrupt operations, potentially necessitating partial or complete shutdowns, adversely impacting business performance, financial health, operational results, and cash flows.
• Limited Exposure in the Train Control System- The company has recently ventured into Train Control Systems and related services, a domain where it has no prior experience. With no operating history in this new line of business, the company may face challenges in achieving the margins or operating results comparable to its established operations. On December 12, 2024, the company received a purchase order from Chittaranjan Locomotive Works (CLW) for the supply, installation, testing, and commissioning of onboard Kavach equipment in 1,200 locomotives, valued at ₹9,786.06 million, contingent upon obtaining ISA certification. Failure to secure the ISA certificate or subsequent RDSO approval could hinder the company’s ability to fulfill this order.
• Corporate Governance Failure – Although not directly linked to its operations, the management has exhibited lapses in corporate responsibility. Notable instances include failing to maintain funds raised from share issues in a separate bank account, non-compliance with CSR obligations, failure to appoint audit committee members and independent directors as required, and multiple delays in statutory filings. These shortcomings have led to penalties and could result in severe consequences if such practices persist. Additionally, the management's inability to provide adequate justification for discrepancies in the opening balance identified by the new auditor led to a modified audit opinion for the financial year.

Financial Snapshot:

KPI comparison with Industry Peers

The company is involved in the business of specialty wires and also train controls and signaling business. There are no listed companies that exclusively undertake the manufacturing of specialty cables or the train control and signalling business. Moreover the company has not generated any revenue from the train controls and signalling business, but has received orders for the same. Hence from the analysis of financial statement , peers involved in wires business are considered for correct comparative analysis.