Automotive component maker Shivam Autotech Limited (SAL) has filed a Letter of Offer to undertake a rights issue of up to Rs 120 Crore to restructure its balance sheet and unblock factory operations. Under the approved terms, the company is offering 10,00,00,000 new equity shares priced at Rs 12 per share (including a Rs 10 premium) in a 19:25 entitlement ratio to existing shareholders of record as of October 15, 2026.
Deleveraging the Balance Sheet and Unblocking Operations
The fundraise serves two primary structural goals: debt conversion and liquidity infusion. SAL’s promoter, Dayanand Munjal Investments Private Limited, is adjusting Rs 75 Crore of outstanding unsecured loans directly into equity subscription money. This non-cash adjustment is designed to restore net worth—which fell to -Rs 40.68 Crore in FY26 and widened to -Rs 61.67 Crore in Q1 FY27—to positive territory.
Simultaneously, Rs 32 Crore from the cash proceeds is earmarked for long-term working capital replenishment. In FY26, SAL’s four manufacturing plants experienced a severe drop in capacity utilisation. Capacity utilisation at Haridwar (Uttarakhand), Rohtak (Haryana), Binola (Haryana) and Kolar (Karnataka) stood at 62.41%, 55.45%, 53.63% and 41.40%, respectively.
The offer document reveals that this operational slowdown was not caused by a shortage of OEM purchase orders, but by severe working capital constraints that restricted the procurement of raw steel. The Rs 32 Crore injection aims to address this raw material supply bottleneck.
Heavy Client Concentration and the 'Red Vendor' Exposure
SAL’s commercial profile exhibits extreme customer concentration, deeply anchored in India’s two-wheeler ecosystem. Its top 10 customers generated 87.99% of total operational revenue in FY26. Customer 1 alone accounted for 48.94% of sales in FY26, rising to 52.49% in Q1 FY27. Furthermore, clients with relationships exceeding 12 years contribute 79.10% of overall turnover, reflecting longstanding ties to the Hero/Munjal network.
However, severe balance-sheet stress triggered risk mechanisms across key buyers. Due to negative net worth and high leverage, SAL was classified as a "Red Vendor" by key customers accounting for 77.5% of its revenue. While no order cancellations occurred during FY26 or Q1 FY27, the rating severely threatens SAL’s ability to secure new component allocations on upcoming vehicle platforms unless its financial ratios normalise.
Technical Core and Move towards Lightweighting
SAL’s core manufacturing capabilities centre on precision hot, warm and cold forging using near-net-shape technology to produce transmission gears, transmission shafts, starter motor parts and steering assemblies for two-wheelers, passenger vehicles and commercial vehicles.
Steel bright bars and coils represent approximately 90% of raw material purchases. Although contractual price pass-through mechanisms exist with OEMs, temporary lags during commodity price spikes can tie up operational liquidity. To adapt to OEM vehicle electrification and fuel-efficiency demands, SAL is actively commercialising aluminium-forged components to expand beyond traditional steel forgings.
Financial and Operational Performance
In terms of top-line performance, SAL generated revenue from operations of Rs 109.58 Crore in Q1 FY27 (the three-month period ended June 30, 2026), following Rs 409.58 Crore in FY26 and Rs 453.98 Crore in FY25. Despite operational headwinds, core operating EBITDA remained positive at Rs 7.92 Crore in Q1 FY27 and Rs 31.80 Crore in FY26. However, heavy debt-servicing costs and unabsorbed fixed overheads led to continued bottom-line stress, with SAL reporting a net loss of Rs 20.99 Crore in Q1 FY27, following net losses of Rs 81.33 Crore in FY26 and Rs 48.04 Crore in FY25.
These accumulated losses eroded equity capital, pushing SAL’s net worth further into negative territory to -Rs 61.67 Crore as of June 30, 2026, compared with -Rs 40.68 Crore at the end of FY26 and positive net worth of Rs 31.48 Crore in FY25.