Shivam Autotech Rights Issue 2026 Review by Dilip Davda

Shivam Autotech Ltd., (SAL) is engaged in the manufacturing of precision engineering components, requiring raw materials which are metals and commodities in nature. The company has historically derived majority of its revenues from the domestic market. It is majorly dependent on domestic sales while its products are also sold in USA, Germany, Mexico, Spain, Liechtenstein and Hungary. Thus, the sales of the Company are widely dispersed throughout the domestic and any failure to maintain such dispersion may impact sales, revenues, and consequently, the financial performance of the Company.

The ongoing geopolitical conflicts and war-related disruptions have resulted in an increase in the cost of petroleum-based consumables used in its manufacturing operations. It is currently in discussions with customers regarding the pass-through of such increased costs through appropriate commercial arrangements. However, there can be no assurance that it will be able to fully or timely pass on such increased costs to customers, or at all. Any inability or delay in recovering such increased costs may adversely affect its operating margins, profitability, cash flows and results of operations.

Further, any escalation or prolongation of geopolitical conflicts, including war, may lead to further increases in the prices of petroleum-based consumables and other raw materials, disruptions in global supply chains, volatility in commodity prices, trade restrictions or broader macroeconomic uncertainties. If such developments occur and the company is unable to mitigate their impact or recover the increased costs from customers, its business, financial condition, results of operations and cash flows could be materially and adversely affected.

Any economic downturn or adverse changes within this market could significantly impact on its sales performance. Consequently, fluctuations in the domestic economy pose a considerable risk to financial stability and growth prospects. Furthermore, changes in consumer preferences, increased competition, or regulatory shifts within the domestic market can also adversely affect its sales. SAL’s heavy dependence on this single market means that it is particularly vulnerable to its economic conditions. In order to mitigate such risks, the Company is proposing to expand its product portfolio by entering the aluminium forging segment. It has developed aluminium forging products in response to customer requirements and evolving market demand and intend to commence their commercial manufacture to expand its presence in the automotive components sector in the current Fiscal. However, there can be no assurance that it will be able to successfully commercialize such products, achieve the anticipated demand or realize the expected benefits from such expansion within the expected timelines, or at all. As of June 30, 2026, it had 753employees on its payroll.