Shivam Autotech Limited , an auto component manufacturer, has announced a significant move to bolster its financial position. The company's board has approved raising up to ₹120 crores through the issuance of optionally convertible debentures (OCDs) to Alpha Alternative Structured Credit Opportunities Fund.

Key Details of the Fundraising

Special Rights and Approvals

The OCDs come with special rights for the investor, including:

• Appointment of a nominee director on the company's board
• Affirmative voting rights on specific matters

These rights are subject to shareholder approval under SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations.

Financial Context

The fundraising decision comes against a backdrop of financial challenges for Shivam Autotech. An analysis of the company's balance sheet reveals:

The balance sheet data indicates a significant decline in the company's financial position over the past year, with decreases in total assets and shareholders' capital, alongside an increase in current liabilities.

Implications and Outlook

This fundraising initiative appears to be a strategic move by Shivam Autotech to address its financial challenges and potentially improve its capital structure. The option to convert the debentures into equity shares provides flexibility for both the company and the investor.

The success of this fundraising and its impact on Shivam Autotech's financial health will be closely watched by investors and industry observers. The company's ability to utilize these funds effectively to strengthen its balance sheet and drive growth will be crucial in the coming months.

Shivam Autotech Limited , a key player in the automobile parts segment, has released its financial results for the quarter ended September 30, 2023, alongside a significant fundraising initiative. The company's Board of Directors convened on November 12, 2023, to approve these measures and chart the course for future growth.

Financial Performance

For the quarter ended September 30, 2023, Shivam Autotech reported:

• A net loss of Rs 9.10 lakhs, an improvement from the previous quarter's loss of Rs 11.98 lakhs
• Revenue from operations stood at Rs 11,553.60 lakhs

Fundraising Initiative

In a strategic move to bolster its financial position, the Board has approved a proposal to raise funds through the issuance of Non-Convertible Debentures (NCDs):

• Total fundraising amount: Up to Rs 245 crore
• Method: Private placement
• Type: Secured, redeemable NCDs
• Implementation: To be issued in one or more tranches

This fundraising initiative is subject to necessary approvals, including shareholder consent.

Key Financial Considerations

The company's auditors have highlighted two significant items:

1. Deferred tax assets of Rs 1,989.25 lakhs
2. MAT credit entitlements of Rs 619.86 lakhs

It's noteworthy that deferred tax assets have only been recognized up to March 31, 2021, as a prudent financial measure.

Corporate Governance and Transparency

Shivam Autotech has demonstrated its commitment to corporate governance by disclosing detailed related party transactions for the period from April 1, 2023, to September 30, 2023. These transactions include:

• Sale and purchase of goods and services with related entities
• Loans and advances
• Remuneration to key management personnel

Looking Ahead

While the company continues to navigate challenges in the automobile parts segment, the approved NCD issuance signals a proactive approach to strengthening its financial foundation. The improved quarterly results, albeit still in loss, suggest potential stabilization efforts taking effect.

Investors and stakeholders will be keenly watching how Shivam Autotech utilizes the funds raised through NCDs and whether this infusion will translate into improved financial performance in the coming quarters.

As the automobile industry continues to evolve, Shivam Autotech's ability to innovate and adapt will be crucial in maintaining its position in the competitive auto parts market.