Objects of the issue:
- Repayment/ prepayment, in full or part, of certain borrowings availed by the Company
- Funding capital expenditure towards upgrading and expanding its existing facilities
- General corporate purposes
Investment Rationale:
Established market position in key verticals, including leadership in the fractional horsepower motors segment, bodes well for future
The Company’s robust R&D setup helps in the design, manufacturing, and selling of a range of fractional horsepower motors including universal motors, exhaust fan motors, cooler motors, table fan motors, synchronous motors, sub pump, and fan blower motors. Elin has substantial backward integration in the manufacturing of fractional horsepower motors which includes press machines and moulding machines to manufacture sheet metal and plastics parts which are used in fractional horse power motors. It continues to enhance the production of fractional horsepower motors through the purchase of machinery and equipment. In addition, it continues to focus on increasing the production of metal parts, moulded parts, tools, and cartridge assembly, which will result in enhanced backward
integration and increased productivity across all product verticals. In June 2022, the Company received approval under the Production Linked Incentive (“PLI”) Scheme for White Goods (Air Conditioners and LEDs) for manufacturing of specified eligible products in the LED (components) target segment, with a committed investment of Rs. 100 million. Rising disposable income, electrification across India, and decreasing prices due to increasing competition is expected to boost the demand for household appliances. Moreover, government initiatives such as power for all and housing for all programs such as Pradhan Mantri Awas Yojana are key growth drivers for the demand for fractional horsepower motors in India. We believe that the Company’s deep market penetration, expansion plans for manufacturing facilities as well as backward integration will enable it to be well-positioned to capture the growing demand.
A high degree of backward integration has resulted in greater efficiencies, enhanced quality of products, and customer retention
Elin Electronics has always placed a strong focus on expanding its technological expertise in manufacturing its products and integrating its services.This has enabled the Company to increase its efficiencies and become an ideal partner for its customers, thereby maintaining an edge over other competitors. They have set up in-house manufacturing for die and mould, sheet metal components, plastic moulded components, aluminium dies casting, and surface coating. Moreover, they have machineries that produce best-in-class tools and dies which in turn support best-quality components and subassemblies. As on October 31, 2022, their setup included 157 moulding machines and 104 power presses which helped to bring efficiencies and economies of scale. It is to be noted that the Company has an in-house PCB assembly on surface mount technology (SMT) which is a critical part of its manufacturing process and prowess. The Company’s backward integration provides the benefit of greater control over the manufacturing process, quality, and the corresponding benefits of cost efficiencies, thereby improving their margins. Elin’s backward integration also enables them to have less dependency on third parties, gain control over the quality of components required for manufacturing, have an upper edge in designing products, improve operational and functional efficiencies and gain strategic advantages over competitors. Thus, they can fulfill customers’ requirements on time and enhance their ability to offer cost-competitive ‘one-stop-shop’ solutions.
