Divine Power Energy(DPEL) IPO: Don’t Get Blinded by the Light

Divine Power Energy(DPEL) Introduction

In the dynamic landscape of energy and infrastructure, Divine Power Energy Limited stands as a beacon of innovation and reliability. As we delve into the heart of this remarkable company, let’s explore its journey, strengths, and aspirations.

Brief about Divine Power Energy(DPEL)

Summary of the business of Divine Power Energy(DPEL)

Divine Power Energy Limited is a manufacturer of Bare Copper/ Aluminium Wire, Bare Copper/ Aluminium Strip, Winding Copper/ Aluminium Wire, Winding Copper / Aluminium Strip. Winding wires / strips are manufactured by annealing and insulating wires / strips and covering them with paper, cotton, fiberglass etc. Winding wires/ strips covered with paper, crepe paper and cotton are sold to power distribution companies and transformer manufacturers to manufacture transformers and also to fix normal wear and tear. In the current calendar year our company started manufacturing wires / strips covered with fiberglass which are used in manufacturing electromagnetic coils, like the one used in lifting magnets which are used to lift heavy objects like containers, machinery etc. The Company has supplied wires / strips covered with fiberglass to markets like Punjab, Bengaluru, Ahmedabad and see good prospects from markets like Maharashtra

History of Divine Power Energy(DPEL)

• Company was incorporated on August 24, 2001, as ‘PDRV Enterprises Private Limited’, a private limited company.
• Ms. Pratibha Talwar and Ms. Dali Giri were the initial subscribers to the Memorandum of Association of our Company. However, Mr. Rajesh Giri, Mr. Vikas Talwar and Ms. Dali Giri are the current promoters of the Company.

Promoters & Board of Directors of Divine Power Energy(DPEL)

The promoters of our Company are Mr. Rajesh Giri, Mr. Vikas Talwar and Ms. Dali Giri.

Board of directors of Divine Power Energy(DPEL)

Share Holding pattern of Divine Power Energy(DPEL)

Qualitative Factors of Divine Power Energy(DPEL)

• Experienced management and efficient workforce.
• Comprehensive solution provider offering diversified suite of precision products across geographies and end-user industries.
• Scalable business.
• A strong regional presence.
• Consistent track record of growth and financial performance
• Strong long-standing relationships with clients & suppliers within the industry
• Strong, experienced and dedicated senior management team and qualified workforce

Strategy of Divine Power Energy(DPEL)

• Strengthen brand value
• Expanding customer base
• Quality Assurance
• Continue to improve operations
• Continue to improve operating efficiencies through technology enhancements

Industry Outlook

NON-FERROUS MINERALS AND METALS INDUSTRY

GLOBAL SCENARIO – COPPER

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The world Copper Mine production from September, 2022 to August, 2023 was about 22,138 thousand metric tonnes (TMT). The share of India in the world production was 25,408 TMT i.e. 0.11% during September, 2022 to August, 2023.

The world Refined Copper Production from September, 2022 to August, 2023was about 26,236 TMT against world consumption of 26,263 TMT. As per International Copper Study Group (ICSG) forecast dated 04.10.2023 for the Calendar Year 2023, world Refined Copper production and consumption are projected as 26,351 and 26,357 TMT, respectively. The Projected world Refined Copper production & consumption from September, 2022 to August, 2023 shall be 26,025 and 26,183 TMT, respectively. By comparing the figures of world Refined Copper production and consumption (Forecast) vs. actual from September, 2022 to August, 2023, it is coming around 101.25% and 100.66%. The share of India in the world production was 0.20% during September, 2022 to August, 2023.

The average LME price in October 2023 was US$ 7,939.66 per tonne compared to average LME of US$ 7,621.21 per tonne in October 2022, thereby registering an increase by 4.18%. The average LME price during the year 2022-23 was US$ 8,551.00 per tonne, and cumulative average LME price during 2023-24 (April- October) was US$ 8,436.20 per tonne.

DOMESTIC SCENARIO – COPPER

The size of Indian copper industry (consumption of refined copper per annum) is around 6.6 lakh tonnes, which as percentage of world copper market is only three percent. Sterlite Industries, Hindalco Industries and Hindustan Copper Ltd. are major producers of refined copper in India. Production in India has declined significantly due to the permanent closure of Vedanta’s smelter/ refinery plant of Tamil Nadu in May, 2018.

The production of copper cathode in the organized sector by the public sector unit viz. Hindustan Copper Ltd. (HCL), and private sector units viz. Hindalco Industries Ltd. (HINDALCO, Unit Birla Copper) and Sesa Sterlite Ltd. (SSL) in the country, during FY 2022-23 and the month of October 2023 is as follows:

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Capacity and Production during FY 2022-23 is as follows:

(Unit: Lakh Tonnes)

FACTORS INFLUENCING COPPER MARKETS

• Copper prices in India are fixed on the basis of the rates that rule on LME and Rupee & US Dollar exchange rate.
• Economic growth of the major consuming countries such as China, USA, Japan, Germany, India etc.
• Growth and development in the Infrastructure, Real-estate, Telecom and Electrical Industry, Renewable Energy and Electrical Vehicle Sector.
• Surplus/Deficit in copper market.

Business Data of Divine Power Energy(DPEL)

Products of Divine Power Energy(DPEL)

• Aluminium Strips
  • Aluminium Strips are drawn from Aluminium rods which are used to make aluminium winding strips.
  • make strips in the range of 5 mm sq. to 150 mm sq.
  • sell aluminium strips to different parties who buy from us to manufacture winding strips
• Copper Strips
  • Copper Strips are drawn from Copper rods which are used to make copper winding wire.
  • manufacture strips of wide description ranging from mm sq. to 150 mm sq. depending on the customer demand.
• Copper Wires
  • Copper wires are drawn from Copper rods which are used to make copper winding wires.
  • Copper being the good conductor is widely used in power infrastructure including electricity wires at home. In addition, copper good tensile strength, lower thermal expansion which makes it ideal to make home electrical wires.
  • manufacture copper wires in the range of 0.19 mm to 4.00.
• Aluminium Wires
  • Aluminium wires are drawn from Aluminium rods which are used to make aluminium strips.
  • Aluminium wires are widely used in power infrastructure owing to its light weight and lower cost. It is mainly used in overhead power lines.
  • Aluminium wires could be sold to manufactures of winding wires and overhead power lines.
• Winding Wires
  • Winding wires are made by insulating Copper / Aluminium Wires with paper, crepe paper, cotton and fiberglass.
  • Winding wires are used to make coil of transformers, electromagnetic coil used in lifting magnets, servo inverters and motors.
  • Manufacture Double Paper Covered, Triple Paper Covered and Multi Paper Covered winding wires which are insulated by insulated paper/ crepe paper.
  • Also manufacture Double Cotton Covering, Triple Cotton Covering and Multi Cotton Covering winding wires which are insulated with cotton threads. In addition, we manufacture fiberglass insulated winding wires insulated with fiberglass.
  • Manufacture winding wires of different description depending on the customer need.
• Winding Strips
  • Winding strips are made by insulating Copper / Aluminium strips with paper, crepe paper, cotton and fibreglass.
  • Winding strips are used to make coil of transformers, electromagnetic lifting magnets, servo inverters and motors.
  • Just like winding wire, we manufacture winding strips which are insulated with insulating paper, crepe paper, cotton and fiberglass.
  • Manufacture winding wires of different description depending on the customer need.
• Super enamelled insulated wires
  • Super enamelled insulated wires are made by insulating copper/ aluminium with super enamelled varnish.
  • Super enamelled insulated wires used to manufacture coil of transformers, electromagnetic lifting magnets, servo inverters and motors.
  • Super enamelled insulated wires have long life than paper coated or cotton coated winding wires and have higher temperature bearing capacity.
  • Do not manufacture super enamelled insulated wires

Product wise break-up

Geography presence

strong presence in North India particularly in markets like Uttar Pradesh, Delhi, Uttarakhand, Haryana, Punjab and Bihar. Primarily we sell winding wires / strips to power distribution companies and transformer manufacturers. In the current calendar year, we have started selling fiberglass insulated winding wires to the industry dealing in manufacturing of electromagnetic field coils used for making magnets used to lift heavy objects like containers, machinery etc., which we mainly sell to states like Punjab, Karnataka and Gujrat. We see a huge prospective market in Mumbai which houses a large port and shipping industry.

(Rs. In Lakhs)

Customer dependency

(Rs. In Lakhs)

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Supplier dependency

(Rs. In Lakhs)

Machinery/Plants/Factory

one manufacturing plant which is strategically located at Plot No 56/1&2, Site-IV Industrial Area Sahibabad, Ghaziabad having total area of 1,777 square meters (Sq. m.). The manufacturing facility is built in an area of 1550 sq. m with an open area of 277 sq. m. Manufacturing Facility we produce Bare Copper/ Aluminium Wire, Bare Copper/ Aluminium Strip, Winding Copper/ Aluminium Wire, Winding Copper / Aluminium Strip with latest product-specific equipment and machineries including Vertical Paper Covering Machine for Round Wire, Fiberglass Insulation Machine, Automatic Horizontal Multipaper Covering, RBD Machine, Wire Drawing Machines, Conform Machines etc. Products are made from copper and aluminium with insulation by cotton, paper, crepe paper, fiberglass etc.

Capacity Utilisation

(In Metric Tonnes)

Competition

In the listed space Shera Energy Limited, Bhagyanagar India Limited, Rajnandini Metal Limited, Ram Ratna Wires Limited and Precision Wires India Limited are our competitor as they manufacture all kind aluminium / copper winding wires i.e. paper insulated, Enamel coated and Fiberglass Insulated etc. In addition to winding wires, our competitors also manufacture tubes, billets, rods, sheets, nuggets and bus bars made from copper, aluminium, and brass. Considering the size of our competitors and the scale at which they operate we face stiff competition from them. Some of our competitors have deep pockets owing to their size, which limit our capability to cater the growing demand and match the ever-evolving technological developments. However, owing to huge demand for our product, our competitiveness and size of market we do not envisage major disruption from our competitors.

Some of unlisted players who can be our competitors:

• Vimlesh Industries Private Limited
• Sterling Enamelled Wires Private Limited

Peer companies comparison

Group companies

• Viraj Upkram Private Limited (“VUPL”)
• Morpheus Enterprises Private Limited (“MEPL”)
• Pratibha Transformers Private Limited (“PTPL”)

Business risk factors

• Depend on a few suppliers for our raw materials and any delay, interruption or reduction in the supply of raw materials to manufacture our products or volatility in the prices of raw materials, may adversely affect our business, results of operations, financial condition and cash flows.
• Derive a significant portion of our revenue from our top 10 customers. The loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for our products could adversely affect our business, results of operations, financial condition and cash flows.
• Company do not have firm commitment agreements with our customers. If our customers reduce their purchases from us or choose not to source their requirements from us, there may be an adverse effect on our business, results of operations, financial condition and cash flows.
• The industry segments in which we operate being fragmented, we face competition from other players, which may affect our business operational and financial conditions.
• Company has reported certain negative cash flows from its financing activity and investing activity, details of which are given below. Sustained negative cash flow could impact our growth and business
• Company profit margins are affected by the prices of Copper and Alumnium owing to their cyclical nature
• Manufacturing capacity may not reach their installed capacity and we may also be unable to effectively utilize our expanded manufacturing capacities.

Financials

Key Financial Ratios

Key Performance Indicators

(Rs. In Lakhs)

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Balance Sheet

(Rs. In Lakhs)

Profit & Loss

(Rs. In Lakhs)

Cash Flow

(Rs. In Lakhs)

Capital structure

(All amounts in Indian Rupees Lacs, unless otherwise stated)

SWOT

• Strengths:
  • Stable Demand: Divine Power Energy Limited manufactures winding wires and strips used in transformers. These components are essential for power transmission and distribution. The company maintains stable demand with clients like TATA Power Limited and BSES.
  • Trusted Suppliers: Sourcing raw materials from reliable suppliers like NALCO and Hindalco ensures uninterrupted production.
  • Profitability: The company’s profit after tax (PAT) has significantly increased, boosting investor confidence.
  • Equity Growth: Equity has consistently increased, reducing reliance on debt financing.
• Weaknesses:
  • Narrow Product Focus: Divine Power Energy Limited’s product portfolio is centered around winding wires and strips. Diversification may be a challenge.
  • Market Dependency: The company’s success is closely tied to the power distribution industry. Any downturn in this sector could impact Divine Power Energy.
• Opportunities:
  • Expansion: With increasing revenue and equity growth, Divine Power Energy has an opportunity to expand its product offerings or enter related markets.
  • Technological Advancements: Investing in research and development for innovative products could enhance competitiveness.
  • Government Initiatives: Government policies promoting renewable energy and infrastructure development can create new avenues for growth.
• Threats:
  • Competition: The industry is competitive, and Divine Power Energy faces competition from other manufacturers of similar products.
  • Economic Fluctuations: Economic downturns or changes in government policies can impact demand for power-related products.
  • Supply Chain Risks: Dependency on suppliers for raw materials poses a risk.

IPO Details

Divine Power Energy Limited IPO Details

Ipo funds utilisation for

(Rs. Lakhs)

Litigation involved

Gray Market Premium

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