Swastika Castal

• Swastika Castal is coming out with an initial public offering (IPO) of 21,64,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 65 per equity share.
• The issue will open on July 21, 2025 and will close on July 23, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced at 6.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Horizon Management.
• Compliance Officer for the issue is Mukesh Khanna.

Profile of the company

Established in 1996, Swastika Castal commenced operations with the object of business of aluminium casting by setting up a foundry, which was a very unique concept at that time. Presently the company has advanced machining, inspection and testing facilities in India which is backed with an efficient team of metallurgists and professionals. The company now supplies the casting as original equipment (ready to use component) to reputed Companies in India and also exports to parts of Europe, and U.S.A.

The company has established itself as a leader in aluminum casting and manufacturing through its diverse production capabilities. It employs several specialized casting processes to meet varying industrial requirements. Their sand-casting operations handle High weight and Integrated casting production, capable of manufacturing components up to 250 kgs. This traditional method excels in creating complex shapes and intricate designs using specially prepared casting sand moulds, making it particularly effective for one-off productions.

The company specializes in providing advanced facilities for quality control and precision measurement, ensuring the highest standards across diverse industries. It utilizes helium gas leak detectors to identify and locate even the smallest leaks in systems or components. Helium, with its small atomic size and inert properties, is an ideal tracer gas for leak detection, allowing it to ensure the integrity of critical products such as vacuum chambers, valves, and hermetic seals. It also offers X-ray and ultrasound testing, which are outsourced to highly specialized partners to guarantee the most accurate results. These non-destructive testing methods are essential for inspecting internal structures of materials. X-ray testing identifies defects such as cracks or voids, while ultrasound testing uses high-frequency sound waves to detect subsurface flaws or measure material thickness.

Proceed is being used for:

• Capital expenditure for plant & machinery and construction of shed & building
• Working capital requirements
• General corporate purpose

Industry Overview

India is the second largest Aluminium producer, among top-10 producer in refined copper and 4 largest iron ore producer in the world. Continued growth in production of iron ore in the current financial year reflects the robust demand conditions in the user industry viz. steel. Coupled with growth in aluminium and copper, these growth trends point towards continued strong economic activity in user sectors such as energy, infrastructure, construction, automotive and machinery. In the non-ferrous metal sector, primary aluminium production in FY 2024-25 (April- December) posted a growth of 1.6% over the corresponding period last year, increasing to 31.56 lakh ton (LT) in FY 2024- 25 (April- December) from 31.07 LT in FY 2023-24 (April- December).

Aluminium casting represents a sophisticated manufacturing process where molten aluminium is carefully poured into precisely engineered molds, enabling the creation of intricate and complex components essential for various high-performance industries, including automotive manufacturing, aerospace applications, and renewable energy systems. The global aluminium casting market is experiencing unprecedented expansion, primarily propelled by increasing demand for lightweight yet durable materials in the rapidly growing electric vehicle (EV) sector and the expanding renewable energy infrastructure. This growth trajectory is particularly pronounced in India, where rapid industrialization and the dynamic evolution of the automotive sector are creating substantial opportunities for market acceleration and technological advancement.

In 2022, the die casting segment was the largest revenue generator, and is anticipated to grow at a CAGR of 5.4% during the forecast period. Die casting is one of the aluminium casting processes where molten metal is forced under high pressure into the mold cavity. This mold cavity is made by using hardened tools steel dies that have a specific shape and size of the desired casting. Generally, die castings are made from non-ferrous metals such as zinc, magnesium, lead, and others. They are used to manufacture a wide range of consumer, commercial, and industrial products such as automobiles, toys, electronic devices, and others. Moreover, the increasing establishment of industries in both developed and developing economies may enhance the demand for die casting for producing various instruments, measurement vessels, and other industrial machinery parts. This is anticipated to increase the adoption of die casting among the growing industrial facilities; thus, fueling the market growth. 

Pros and strengths

Diverse product offerings: The ability to cater to various industries with a broad product portfolio ensures resilience and adaptability to changing market demands.

Global reach: Established export channels to Europe, and the U.S.A. position the company to capitalize on growing international demand for high-quality aluminum castings.

Commitment to quality: Rigorous quality control and testing processes build customer trust and satisfaction, reinforcing the company's reputation as a reliable supplier.

Risks and concerns

Maximum revenue comes from limited customers: Substantial portion of the company’s revenues are dependent on few customers. The company has garnered 92.03%, 93.55%, and 97.70% of its total revenue from top 10 customers in FY25, FY24 and FY23 respectively. Any perceived decline in its quality standards, growing competition and any change in demand may adversely affect its ability to retain or acquire customers and consequently affect its financials. It cannot assure that it shall generate the same quantum of business, or any business at all from its top customers, and any loss of business from one or more of them may adversely affect its revenues and results of operations.

Rely significantly on some suppliers for the supply of raw materials: The company obtains its raw materials such as aluminium and aluminium alloys from fixed suppliers in the domestic market. It procures the raw materials required for its business pursuant to the issue of the purchase orders. The company procures 70.34%, 94.70% and 90.80% of its raw material from top 5 suppliers in FY25, FY24 and FY23 respectively. If these suppliers are unable or unwilling to supply raw materials on time or otherwise fail to meet its requirements, its business will be harmed. An inability to procure the desired quality, quantity of its raw materials and components in a timely manner and at reasonable costs, or at all, may have a material adverse effect on its business, results of operations and financial condition.

Dependent on only one manufacturing facility: The company has only one manufacturing facility, located at Vemardi Road, Karjan, Vadodara, Gujarat. As a result, any local social unrest, natural disaster, or breakdown of services and utilities in that area could have a material adverse effect on the business, financial position, and results of its operations. Its manufacturing facility is subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output, efficiency, obsolescence, labour disputes, strikes, lock-outs, non-availability of services of its external contractors, etc. In the event that it is forced to shut down its manufacturing facility for a significant period of time, it would have a material adverse effect on its earnings, its other results of operations, and its financial condition as a whole.

Outlook

Swastika Castal is engaged in the business of aluminum casting. The company operates primarily in the manufacturing sector, focusing on producing high-quality aluminum castings through processes such as sand, gravity, and centrifugal casting. The company has an in-house heat treatment facility, ensuring superior quality, efficiency, and cost-effectiveness with precise control over mechanical properties and dimensional stability. On the concern side, substantial portion of the company’s revenues are dependent on few customers and the loss of, or a significant reduction in purchases by any one or more such customers could adversely affect its financial performance. Moreover, the company relies significantly on some suppliers for the supply of its raw materials. If these suppliers are unable or unwilling to supply raw materials on time or otherwise fail to meet its requirements, its business will be harmed.

The company is coming out with an IPO of 21,64,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 65 per equity share to mobilize Rs 14.07 crore. On performance front, the company’s total revenue increased by 29.79% to Rs 3,031.28 lakh for fiscal year ended March 31, 2025 from Rs 2,335.46 lakh for fiscal year ended March 31, 2024. Net Profit has increased by Rs 198.51 lakh and 305.50% respectively from profit of Rs 64.98 lakh in the fiscal year ended March 31, 2024 to profit of Rs 263.49 lakh in the fiscal year ended March 31, 2025.

The company is strategically positioned for diversification and growth within the aluminum casting industry due to a combination of its market positioning, technological capabilities, and operational efficiencies. By leveraging its strategic market presence, technological advancements, and operational capabilities, company is well-positioned to explore new markets, diversify its product offerings, and maintain a competitive edge in the aluminum casting industry.