Sathlokhar Synergys E&C Global Limited
Overview
| Logo Website 🔗 |  |
| Business Activity | Construction |
| Division | EPC, Turnkey Projects |
| Sub-class | Industrial Buildings, Commercial Buildings. |
| Location | Kanchipuram, Tamilnadu |
| Establishment Year | 2013, as Lohats Ventures Private Limited |
Management
| Managing Director | Mr. G. Thiyagu |
| Educational Qualifications | Diploma in Electrical and Electronics Engineering Diploma in Industrial Safety M.A in Public Administration, MBA Ph.D (Business Management) |
| Experience | Over 25 years in various aspects of the real estate industry |
| Annual Salary | 1.87 Cr |
| Total Number of Employees | 118 |
About
Sathlokhar Synergys E&C Global Limited is an India-based construction company that specializes in engineering, procurement, and construction (EPC) and infrastructure turnkey contracting (This means they handle the entire project lifecycle from design to completion, generating revenue at each stage).
They are involved in the construction of buildings and infrastructure facilities for various sectors including industrial, warehousing, commercial, institutional, pharmaceutical, solar, hospitals, hotels, resorts, and villas.
- A detailed list of services offered by the company
- Infrastructure development
- Real estate development and construction of buildings
- Project management and facility management
- Engineering services, including MEP (Mechanical, Electrical, and Plumbing) design consulting
- Construction of residential, industrial, commercial, and institutional buildings on a normal and turnkey basis
- Electrical and mechanical works, including HT/LT works, panels, cables, and wiring
- PEB (Pre-Engineered Building) steel works and truss works
- Air and water pipeline works
- STP (Sewage Treatment Plant), ETP (Effluent Treatment Plant), and RO (Reverse Osmosis) systems
- Installation, sales, commissioning, and maintenance of solar power projects as an authorized channel partner for TATA Power Solar Systems Ltd.
- Clients
- Government agencies (e.g., Tidel Park Ltd)
- Multinational corporations (e.g., Kemin Industries, Godrej Consumer Products, PepsiCo, Flyjac Logistics)
- Private companies across various sectors (e.g., pharmaceuticals, manufacturing, logistics)
- Industrial: A significant portion of the company’s clientele comes from the industrial sector. This includes multinational companies setting up factories, warehousing facilities, and logistics hubs like –
- Xylosuisse Private Limited (Swiss Geneva Based) – Factory Building
- Filtercat Products Pvt Ltd (Spain Based) – Factory Building
- Kemin Industries South Asia Pvt Ltd (USA Based) – Factory Building
- Godrej Consumer Products Ltd (Indian) – Factory Building
Commercial and Institutional: The company also caters to commercial and institutional clients, constructing buildings for various purposes such as offices, hospitals, hotels, and educational institutions.
Revenue Recognition: Revenue from construction projects is typically recognized based on the percentage of completion method. This implies that revenue is recorded progressively as the project advances, not as a lump sum upon completion.
Raw Material Composition: A major portion of the company’s raw materials consists of steel, cement, ready-mix concrete (RMC), soil, pre-engineered building (PEB) MS plates, and MEP (mechanical, electrical, and plumbing) materials.
Projects Overview: 14 ongoing projects worth 449 Cr across 3 states, 64 projects completed worth 334 Cr and 435 Cr worth projects on pipeline.
Work Flow Chart
Projects – Category
Revenue – Location
Audit and Legal
Related Party Transactions: Sathlokhar Synergys E&C Global Limited has engaged in related party transactions amounting to ₹ 11.07 Cr, 4.48% of total revenue for FY 2024
Statutory auditors did not issue any qualifications in their examination reports for FY 2024, 2023, and 2022.
The company has faced penalties for regulatory non-compliance, particularly in tax and employee benefit filings.
Contingent liabilities are negligible at 2.93 lakhs
SWOT Analysis
Strengths
| Experienced Promoters with Deep Domain Knowledge: The company benefits from experienced promoters with significant expertise in the construction and infrastructure industry. |
| Diversified Clientele: Sathlokhar Synergys E&C Global Limited serves a diverse clientele across industries, including industrial, warehousing, commercial, institutional, pharmaceutical, solar, hospitality, and residential sectors. |
| Established Track Record: The company boasts a proven track record of successfully completing projects, demonstrating its capabilities in project management, execution, and client satisfaction. |
| In-house Integrated Model: The company operates an integrated EPC model, allowing for greater control over project timelines, quality, and costs, which enhances its competitiveness. |
| Strong Order Book: The company has a robust order book, reflecting a healthy pipeline of projects and potential for future revenue growth. |
Weaknesses
| Concentration of Business in Specific Regions: A significant portion of the company’s revenue is concentrated in Tamil Nadu and Karnataka, exposing it to regional economic downturns and regulatory changes. |
| Dependence on a Limited Number of Clients: The company is reliant on a small number of clients for a significant portion of its revenue, exposing it to client-specific risks such as contract terminations or disputes. |
Opportunities
| Growth in the Indian Construction and Infrastructure Sector: The construction and infrastructure industry in India is experiencing substantial growth, presenting opportunities for the company to secure new projects and expand its market presence. |
| The Indian government is committed to investing in infrastructure across various sectors, including renewable energy, roads and highways, and urban development. Sathlokhar Synergys’ expansion into segments like solar energy, aligns well with these government initiatives and positions the company to benefit from the anticipated industry growth. |
| Expansion into New Geographical Areas: Expanding its operations to new states and regions within India could unlock new markets and reduce reliance on existing markets. The company has already initiated expansion into Uttar Pradesh. |
Threats
| Intense Competition in the Construction Industry: The construction industry is highly competitive, with the presence of established players and new entrants. The company faces challenges in securing contracts, managing costs, and maintaining profitability. |
| Economic Slowdown and Volatility: Economic downturns and market volatility can adversely impact the construction industry, leading to project delays, cancellations, and reduced demand for the company’s services. |
Porter’s Five Forces
| Threat of New Entrants | MODERATE |
| The construction industry generally has moderate/low barriers to entry; Sathlokhar Synergys E&C Global Limited operates in specialized segments that could present higher barriers. The company’s in-house integrated EPC model and established relationships with clients could deter new players. However, the industry’s growth potential could attract new companies seeking to capitalize on opportunities, particularly in segments with lower barriers to entry. |
| Bargaining Power of Suppliers | LOW |
| The construction industry generally relies on suppliers of raw materials such as cement, steel, and labour. Price fluctuations in these materials affect players across. However since there are abundant suppliers in the market, suppliers in particular do not have much bargaining power. |
| Bargaining Power of Buyers | MODERATE – HIGH |
| The company faces moderate to high bargaining power from buyers. It serves a diverse clientele across industries, indicating that no single buyer holds significant influence. However, the company’s dependence on a limited number of clients for a large portion of its revenue could increase buyer power. |
| Threat of Substitute Products or Services | LOW – MODERATE |
| Modular construction, prefabrication, and alternative building materials could emerge as substitutes in certain situations. |
| Rivalry Among Existing Competitors | HIGH |
| The construction industry is highly competitive, characterized by the presence of numerous established players and new entrants. |
Peer Comparison
Return on Net Worth (RoNW): Sathlokhar Synergys has a RoNW of 38% in FY 2024 compared to its peers, K2 Infragen Limited (81%), Suraj Estate Developers Limited (45%), and SRM Contractors Limited (30%).
Zero Debt Burden: Sathlokhar Synergys operates with a debt-to-equity ratio of 0.00 in FY 2024, implying no reliance on debt financing. This debt-free position provides a significant advantage over peers like SRM Contractors Limited (debt-to-equity ratio of 0.43), as it reduces financial risk, enhances flexibility, and potentially allows for more competitive bidding on projects.
Green Box
Karnataka emerged as the highest revenue-generating state for Sathlokhar Synergys E&C Global Limited in FY 2024, contributing ₹ 157 Cr. This was a significant shift from FY 2023 and FY 2022, where the company’s revenue was primarily concentrated in Tamil Nadu.
Robust Revenue Growth: The company exhibits an impressive 183.52% revenue growth in FY 2024, signalling its ability to secure new projects and capitalize on industry opportunities.
- Geographic Diversification: Sathlokhar Synergys aims to expand its geographic reach beyond its core markets of Tamil Nadu and Karnataka. This strategy is evident in its upcoming projects:
- Jammu & Kashmir: The company has secured a turnkey contract for constructing a factory building in Jammu & Kashmir, marking its first foray into this region.
- Hubli, Karnataka: Sathlokhar Synergys is in the design phase of a project in Hubli, Karnataka, demonstrating its intention to expand within the state
Strategic Partnerships and Joint Ventures: Sathlokhar Synergys’ existing joint ventures, such as the one with M/s Reliance Campa Cola for a factory building in Uttar Pradesh, demonstrate the company’s experience and willingness to collaborate with established players for large-scale projects.
Sathlokhar Synergys E&C Global Limited has experienced positive operating cash flow in the past few years, specifically in FY 2024 and FY 2023. However, the company did have negative operating cash flow in FY 2022.
Continued Focus on Large-Scale Projects: Sathlokhar Synergys’ expansion plans emphasize securing larger projects, which offer advantages in terms of fixed cost rationalization and potential for higher margins. The company believes that focusing on larger projects allows for greater efficiency and profitability, as fixed costs like employee expenses and administration represent a lower proportion of the total project cost compared to smaller projects.
- Project Portfolio Expansion:
- While maintaining a focus on its core expertise in building construction, Sathlokhar Synergys intends to expand its project portfolio by venturing into new, related segments:
- Solar Projects: The company plans to actively pursue opportunities in the solar energy sector.
- MEP (Mechanical, Electrical, and Plumbing) Projects: Expanding into MEP projects aligns with the company’s existing construction capabilities and allows it to offer a more comprehensive range of services to clients.
- Interior Projects: Sathlokhar Synergys aims to undertake interior projects, further diversifying its revenue streams and leveraging its in-house design and execution capabilities.
Amber Box
Intense Competition: Sathlokhar Synergys operates in a highly fragmented and competitive industry, with numerous established players and new entrants vying for projects. While the company’s strong order book suggests it can effectively compete, maintaining its market share amidst intense rivalry and potential pricing pressures from larger competitors remains a challenge.
Exposure to Project Risks: As an EPC and infrastructure company, Sathlokhar Synergys faces inherent risks associated with project execution, such as cost overruns, delays, and unforeseen challenges. Factors like material price fluctuations, labour shortages, and regulatory changes can significantly impact project profitability
Dependence on Subcontractors: Sathlokhar Synergys relies on subcontractors for the timely completion of its projects. The company’s ability to meet project deadlines and quality standards hinges on the performance and availability of these subcontractors
Working Capital Challenges: The company requires significant working capital to finance its operations,
Red Box
Client Concentration: Sathlokhar Synergys derives a significant portion of its revenue from a limited number of clients. This dependence, with the top ten customers contributing 89.92% of total sales in FY 2024, exposes the company to higher risk if a major client reduces orders or terminates their relationship.
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