Vilas Transcore Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Electrical Equipment |
| Sub-class | CRGO Laminations and Cores |
| Location | Vadodara, Gujarat |
| Establishment Year | 2006 |
Management
| Managing Director | Nilesh Jitubhai Patel |
| Educational Qualifications | Diploma in Electricals (CME) |
| Experience | 27 years |
| Annual Salary | ₹ 9 Crore |
| Total Number of Employees | 268 |
About
Vilas Transcore Limited manufactures a range of electrical lamination and core products, including CRGO (Cold Rolled Grain Oriented) laminations, which are used in various types of transformers.
Products:
Vilas Transcore Limited focuses on manufacturing components essential for transformers used in power distribution and transmission. Their product range includes:
CRGO Transformer Laminations:
These are thin sheets of CRGO steel that form the core of a transformer, minimizing energy losses.
CRGO Stacked Assembled Cores/Coil-Core Assembly:
The company also provides complete assembled cores, ready for coil insertion, which streamlines the transformer manufacturing process for their clients.
Wound Core/Toroidal Core:
These are specialized cores used in various transformers, including current transformers (CTs) and potential transformers (PTs).
Yuke Shunt/Tank Shield:
These CRGO components help reduce losses and control stray flux in large transformers.
CRGO Slit Coils:
The company supplies CRGO steel in slit coil form, offering flexibility to customers who may have their own cutting and shaping requirements.
Product Importance:
The company’s products, particularly CRGO laminations and cores, play a crucial role in the efficient functioning of transformers. The core, constructed from laminated sheets, minimizes energy losses and provides a path for electromagnetic flux.
Manufacturing Units:
The company operates two manufacturing facilities located in Por, near Vadodara, Gujarat. These facilities are equipped with modern machinery and have a combined installed capacity of 12,000 metric tons per annum.
Clients:
Vilas Transcore Limited caters to a diverse clientele, primarily comprising transformer and power equipment manufacturers in India and abroad. Key customers include:
1. Voltamp Transformers Limited
2. Electrotherm India Limited
3. Atlas Transformers India Limited
4. Shilchar Technologies Limited
Raw Materials:
The company’s primary raw material is CRGO (Cold Rolled Grain Oriented) steel coils, which are crucial for manufacturing its products.
Suppliers:
A Mix of Domestic and International Sourcing:
The company sources CRGO coils both domestically and internationally. In FY 2023, 60.67% of raw materials were procured from indigenous sources, while 39.33% were imported mainly from Poland.
Manufacturing Process:
The manufacturing process involves several key stages:
Testing and Inspection:
Incoming CRGO coils undergo rigorous testing to ensure they meet the required specifications.
Slitting:
The wide CRGO coils are slit into narrower widths using specialized slitting machines, catering to diverse customer needs.
Cutting to Length and Stacking:
The slit coils are then cut to specific lengths and shapes as per customer orders. Advanced CNC machines automate this process and also stack the laminations in the correct sequence.
Core Winding and Annealing:
For wound cores/toroidal cores, the slit steel is wound into the desired shape. The winding process induces stresses in the material, which are relieved through annealing in a controlled furnace environment.
Testing, Finishing, and Packaging:
The finished products, whether laminations or cores, undergo further testing to ensure quality. They are then painted or varnished for protection and identification and finally packed securely for dispatch.
Process Flow Chart
Revenue – Category
Revenue – Region
Audit and Legal
Related Party Transactions:
For the nine-month period ending December 31, 2023, related party transactions represented approximately 15.01% of the total revenue majority of which occurred with AtlasTransformers India Ltd. (Formerly Known as Jayesh Electric Ltd).
Auditor’s Remarks:
Emphasis of matter:
Interest Payment under the MSMED Act, 2006:
The auditors drew attention to the company’s dealings with Micro and Small Enterprises (MSEs). They noted that while the company has been making payments based on mutually agreed terms, there’s a potential liability for interest payments if any delays in payments to MSEs occur, as stipulated by the MSMED Act, 2006.
Non-Compliances and Penalties:
The non-filing of Form MGT-14 for the appointment of an internal auditor in 2020.
Clerical errors in annual returns filed with the RoC in previous years.
The unavailability of some corporate records, such as share transfer deeds.
Non-compliance with certain Accounting Standards in the past.
Delays in filing certain returns under the GST laws and the Employees State Insurance and EPF regulations.
Intellectual Property Laws:
The company has applied for trademarks, which are currently facing objections.
Contingent Liabilities:
As of December 31, 2023, Vilas Transcore Limited reported contingent liabilities totalling Rs. 71.51 Lakhs.
Claims against the company not acknowledged as debts: Rs. 53.00 Lakhs
Other money for which the company is contingently liable: Rs. 18.51 Lakhs
Legal Cases:
Criminal Cases:
The company is involved in three criminal matters filed against it, with a total disputed amount of ₹411.55 Lakhs. All three cases are related to the Negotiable Instruments Act, 1881, specifically Sections 138 and 141, which deal with dishonor of cheques due to insufficient funds.
The company has also filed nine criminal cases, with the disputed amount reaching ₹357.57 Lakhs on various companies related to dishonour of cheques.
Tax Disputes:
The company is involved in one direct tax proceeding with a disputed amount of ₹166.16 Lakhs for the Assessment Year 2013-14. The matter is currently pending with the tax department.
The company is also involved in one indirect tax proceeding with a disputed amount of ₹7.57 Lakhs related to GST.
SWOT Analysis
Strengths
| Established Player: The company has a strong presence in the transformer components manufacturing industry, with a track record of growth and repeat orders from customers. |
| Strong Manufacturing Capabilities: The company has two well-equipped manufacturing facilities with a combined installed capacity of 12,000 MT per annum, enabling it to meet diverse customer requirements |
| Strong Financial Performance: The company has demonstrated robust financial performance, with consistent growth in revenue, profitability, and a healthy balance sheet |
Weaknesses
| Dependence on Key Customers: A significant portion of the company’s revenue comes from a few key customers, making it vulnerable to any changes in their demand or business strategies. |
| Lack of Long-Term Contracts: The company primarily relies on purchase orders from customers, which can be amended or canceled, leading to uncertainty in revenue forecasting |
| Dependence on Raw Material Imports: The company imports a significant portion of its raw materials, exposing it to fluctuations in foreign exchange rates and potential supply chain disruptions |
| Limited Product Diversification: Although the company offers a range of products, a significant portion of its revenue comes from CRGO electrical laminations, making it susceptible to fluctuations in demand for this specific product. |
Opportunities
| Growth in Power Sector: The increasing demand for power and the government’s focus on infrastructure development present significant growth opportunities for the company. |
| Outsourcing Trend: The trend of transformer manufacturers outsourcing component production provides an opportunity for the company to expand its customer base and market share. |
| Focus on High-Growth Sectors: The company’s focus on high-growth sectors like renewable energy and infrastructure development can drive future growth. |
Threats
| Intense Competition: The industry is highly competitive, with several players vying for market share. |
| Economic Cyclicality: The demand for the company’s products is linked to the cyclicality of the power sector, making it vulnerable to economic downturns. |
| Raw Material Price Volatility: The prices of raw materials, especially CRGO steel coils, are subject to fluctuations in commodity markets, which could impact the company’s profitability. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE |
| The precision components manufacturing industry has high capital requirements and involves complex technology and processes, acting as moderate barriers to entry. |
| Bargaining Power of Suppliers | MODERATE |
| The company relies on third-party suppliers for its primary raw material, CRGO steel coils. The dependence on imports and the absence of long-term contracts could potentially increase the bargaining power of suppliers. However, the company’s efforts to diversify its supplier base might mitigate this risk to some extent. |
| Bargaining Power of Buyers | HIGH |
| The company’s dependence on a few key customers, particularly Voltamp Transformers Limited, gives these buyers significant bargaining power. The absence of long-term contracts further strengthens the buyers’ position. |
| Threat of Substitute Products or Services | LOW |
| The company’s products are essential components of transformers, and there are currently no direct substitutes for these components. |
| Rivalry Among Existing Competitors | HIGH |
| The industry is highly competitive, with several domestic and international players. The competition is based on factors like product quality, design, price, and customer relationships. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers for FY 2024 is as follows:
| Metric | Vilas Transcore Limited | Jay Bee Laminations Limited |
| Revenue from Operations (₹ in Crores) | 310 | 303 |
| Operating Profit Margin (%) | 10 | 11 |
| Return on Equity (ROE) (%) | 15.1 | 36.4 |
| Return on Capital Employed (ROCE) (%) | 20.8 | 39.6 |
| Debt to Equity Ratio | 0.00 | 0.38 |
Green Box
IPO Funds:
Strategic investment and acquisitions (Rs. 500.00 lakhs):
The company plans to utilize a portion of the proceeds from its IPO for potential strategic investments and acquisitions that can complement its existing business, expand its product range, and enhance its market presence.
Construction of a factory building (Rs. 2009.87 lakhs):
The company intends to construct a new factory shed and building at Karjan, Vadodara, Gujarat to improve operational efficiency and increase its production capacity.
Acquisition and installation of additional plant and machinery (Rs. 4520.71 lakhs):
The company plans to purchase and install new machinery and equipment to support its expansion plans and increase production capacity.
Customization and Flexibility:
The company emphasizes its ability to manufacture products that precisely match customer specifications. This suggests a focus on flexibility and customization, which could be a differentiating factor in an industry where many competitors might offer standardized products.
Industry Outlook:
The increasing demand for electricity in India, coupled with the government’s focus on renewable energy and infrastructure development, is expected to drive significant growth in the power distribution and transmission sector.
Operating Cash Flow:
Vilas Transcore Limited has maintained a positive operating cash flow over the past few years.
Strong Financial Position and Performance:
The company has demonstrated robust financial performance, with consistent growth in revenue and profitability. It also maintains a healthy balance sheet with low debt levels (Near Zero Debt-to-Equity Ratio), indicating financial stability and the potential for future growth.
Amber Box
Capacity Utilization:
The company’s capacity utilization rate for the nine months ended December 31, 2023, was 91.53%. It has reached near full utilization rate and any future growth can only be fueled by successfully implementing expansion plans on time.
Red Box
Limited Product Diversification:
The company’s revenue is heavily reliant on CRGO electrical laminations. Any decline in demand for this specific product could adversely affect the company’s overall performance.
Pricing Pressure:
The company operates in a competitive market and may face pricing pressure from customers, which could impact its profit margins.
Annual Salary of Managing Director:
For a small company with an Annual Profit of less than 25 Crore for the latest FY of 2024, a 9 Crore Annual Salary for the Managing Director looks significant.
Multiple Criminal Cases:
Multiple criminal cases against the company and by the company on others indicate that B2B transactions as a part of company operations are not very smooth.
Images
- For Porter’s Five Forces, the force value of “LOW” is considered good. ↩︎
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