Patil Automation Ltd. IPO: Key Details

Patil Automation

• Patil Automation is coming out with an initial public offering (IPO) of 58,00,800 equity shares in a price band Rs 114-120 per equity share.
• The issue will open on June 16, 2025 and will close on June 18, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 11.40 times of its face value on the lower side and 12.00 times on the higher side.
• Book running lead manager to the issue is Seren Capital.
• Compliance Officer for the issue is Niharika Shamindra Singhal.

Profile of the company

Incorporated in 2015, the company is an automation solutions provider serving industrial clients, primarily in the automotive sector. The company is engaged in designing, manufacturing, testing and installation of customized automation systems such as welding lines (spot welding, MIG and TIG), assembly lines, material handling machineries and special-purpose machineries, tailored to meet the specific requirements of its clients' production facilities. The company’s client base primarily comprises of Automotive Original Equipment Manufacturers (OEMs), Tier I suppliers to Automotive OEMs and manufacturers of automotive components and sub-components, who seek to establish, expand, upgrade, modify or repair their production setup. Its automation solutions focus on optimizing manufacturing processes and reducing manual intervention at its clients' facilities.

The company’s product offerings also include assembly fixtures, welding fixtures, robotic cells, testing and inspection systems and auxiliary items. These products and items support the automation systems and provide integrated solutions to the operational requirements of clients. Its testing and inspection systems include leak testing machines and inspection jigs and gauges to ensure product performance with industry standards. In addition, it also provides support services to its clients, including repair and maintenance services, modification services and manpower support services so as to support system operations.

The manufacturing of its automation systems is carried out at its facility, based on the detailed designs made by it and approved by its customers. The company’s facility, located in the MIDC Chakan area of Village Sudumbre, Tehsil Maval, District Pune, is divided into two units: Unit-I (built up area - 50,536 sq. ft.) and Unit-II (built up area - 58,464 sq.ft.). Its units are equipped with requisite machineries such as CNC bending machines, cutting machines (plasma, oxyfuel and laser), milling machines, jig boring, surface grinding machines, among others and various testing equipment to support production of automation systems. Additionally, its facility is certified under ISO 45001:2018, ISO 9001:2015 and ISO 14001:2015.

Proceed is being used for:

• Funding of capital expenditure towards setup of a new manufacturing facility
• Repayment of a portion of certain borrowings availed by the company
• General corporate purpose

Industry Overview

The global manufacturing industry is evolving rapidly, as it integrates the latest technologies and processes. The last few decades were characterized by increasing use of machines in factories, which slowly replaced manual labor. In several advanced economies, core manufacturing sectors are fully automated with industrial robots carrying out most of the production process. Human intervention is limited to supervisory and monitoring roles. Industrial automation has become a driving force behind economic transformation, reshaping industries, and economies worldwide. Increasing focus on process efficiency, waste reduction, and cost optimization are forcing Indian manufacturing sector to reinvent themselves. With advancements in technology and the adoption of automation solutions, industries across various sectors are experiencing increased efficiency, productivity, and competitiveness.

The welding process, a part of metal fabrication process, forms the backbone of the manufacturing sector which account for approximately 17% of India’s GDP. Welding process is critical for many manufacturing processes where the welding quality welding has a direct impact on the quality of the final product. Design / specification of the product to be fabricated is provided by the customer, and fabrication companies majorly focus only on the operational part of executing the fabrication work as per the supplied designs. Depending upon the product, a wide range of metals – both common as well as exotic - is used for fabrication. Steel and aluminum are two major input materials used in fabrication industries. Metal fabrication facilities (also referred to as fab shops) are often run by independent contractors, Original Equipment Manufacturers and Value-Added Resellers. In the metal fabrication industry, the welding process can be segmented into manual and robotic systems, each serving distinct roles across various industries.

The Indian industrial automation market experienced a steady growth from 2018 to 2023, driven by the increasing adoption of advanced technologies across manufacturing sectors. Starting at approximately $6.5 billion in 2018, the market grew to $13 billion in 2023, reflecting a CAGR of around 15%. This growth was fueled by rising demand for efficiency, precision, and scalability in manufacturing processes, alongside government initiatives like Make in India that encouraged technology-driven investments. Despite challenges such as the global pandemic, the industry demonstrated resilience, with accelerated adoption of automation solutions post-2020 to address labor shortages and enhance productivity. The growth in Industrial Automation Equipment’s appears to be robust in India. The increasing focus on the Government to improve the manufacturing infrastructure in India, through the flagship Make in India program, Industry 4.0 and most recently PLI scheme and Atma Nirbhar is playing a pivotal role. The regulatory changes and policy measures that are being implemented as part of the program are attracting multinational companies. 

Pros and strengths

Design and development capabilities: The design and development process in automation system production is a critical step that involves creating detailed, client-specific designs and developing tailored solutions to address unique operational requirements. This process ensures the functionality, efficiency, and precision of the systems while meeting client expectations. The company’s design and development team employs advanced software tools such as E-PLAN, Delmia, CATIA V5, AutoCAD, Process Simulate, and Solid Edge to craft precise automation systems.

In-house manufacturing facility with integrated testing capabilities: It operates an in-house manufacturing facility comprising of two units Unit-I and Unit II, having combined built up area of around 109,000 sq. ft., which support the production of precision automation systems. Its units are equipped with requisite machineries such as CNC bending machines, cutting machines (plasma, oxyfuel and laser), milling machines, jig boring, surface grinding machines, among others and various testing equipment to support production of automation systems. Its testing setup includes equipment’s for dimensional measurement, weld penetration analysis and material strength evaluation, supported by inspection systems such as coordinate measuring machines (CMM) for the inspection of parts and gauges.

Recognition from customers: In Fiscal 2025, the company supplied its products to over 52 customers, including Automotive Original Equipment Manufacturers (OEMs), Tier I suppliers to Automotive OEMs, electric vehicle manufacturers and manufacturers of automotive components and sub-components. During the Fiscal 2024, it has sold its products in India to 10 states including Maharashtra, Haryana, Karnataka, Gujarat, Madhya Pradesh, Rajasthan and Tamil Nadu. It has also received repeat orders from several customers and have also been recognized by several customers through awards such as the Best Supplier Award, Exceptional Performance Award, Best Tech-Savvy Partner Award, and Appreciation Awards.

Risks and concerns

Maximum revenue comes from limited customers: The substantial portion of its revenues has been dependent upon few customers. For instance, the company’s top ten customers for the F.Y. ended March 31, 2025, March 31, 2024 and March 31, 2023 accounted for 76.67%, 79.51% and 70.88% of its revenue from operations for the respective fiscal year. Its reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, educations, delays or cancellation of orders from its significant customers, a failure to negotiate favorable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business, financial condition results of operations, cash flows and future prospects of the company.

No long-term agreements with suppliers for its input materials: The production of its automation systems relies on raw materials and bought-out parts sourced from various suppliers. Major raw materials include MS steel plates, tubes (rectangular and square sections), C channels and I sections, which are procured through local suppliers. The bought-out parts, such as pneumatic cylinders, PLCs, HMIs, sensors, light curtains, conveyor chains, and gearbox motors, are sourced from various vendors located primarily in Maharashtra and Gujarat. Its cost of raw materials consumed for Fiscal 2025, 2024 and 2023 was Rs 5,820.17 lakh, Rs 7,690.27 lakh and Rs 4503.41 lakh respectively, which represented 49.30, 66.71% and 57.88% of its revenue from operations for the respective fiscal. It does not have any contracts with, or long-term arrangements for sourcing input materials from suppliers of input materials. The absence of long-term contracts makes it susceptible inter alia to short-term supply challenges and exposes it to volatility in the prices of input materials.

Geographical constrain: The company operates through its manufacturing facility comprising of Unit I and Unit II, at Village Sudumbre, Tehsil Maval, District Pune. Due to the geographical concentration of its manufacturing operations in Pune district, its operations are susceptible to local, regional and environmental factors, such as social and civil unrest, regional conflicts, civil disturbances, economic and weather conditions, natural disasters, demographic and population changes, and other unforeseen events and circumstances. Such disruptions could result in the damage or destruction of a significant portion of its manufacturing abilities, significant delays in the transport of its products and raw materials, loss of key managerial personnel or senior management personnel, and/or otherwise adversely affect its business, financial condition and results of operations.

Outlook

Patil Automation specializes in welding and line automation solutions. The company has five operational facilities across India, including two in Pune, it offers comprehensive automation services such as welding lines, assembly lines, auto handling, gantries, production, and testing special-purpose machines. The company has strong design and development capabilities. It also has in-house manufacturing facility with integrated testing capabilities. On the concern side, substantial portion of its revenue has been dependent upon few customers with which it does not have any firm commitments. The loss of any one or more of its major customers would have a material adverse effect on its business, cash flows, results of operations and financial conditions. Moreover, the company’s business operations are majorly concentrated in certain geographical regions and any adverse developments affecting its operations in these regions could have a significant impact on its revenue and results of operations.

The company is coming out with a maiden IPO of 58,00,800 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 114-120 per equity share. The aggregate size of the offer is around Rs 66.13 crore to Rs 69.61 crore based on lower and upper price band respectively. On performance front, the revenue from operations was Rs 11,805.13 lakh in FY25 as compared to Rs 11,527.96 lakh in FY24, reflecting an increase of 2.40%. The company’s profit after tax increased by 49.31%, rising from Rs 783.72 lakh in the FY24 to Rs 1170.21 lakh in the FY25.

The company is focused on addressing the market demand from its existing and new clients in the automotive sector while also expanding its presence into the non-automotive sector. It aims to manufacture and market automation solutions for non-automotive sectors, particularly for the heavy construction equipment, pharmaceutical, and white goods (consumer goods) sectors. By leveraging the additional capacity of its proposed new manufacturing facility, it plans to enhance its ability to cater to non-automotive sectors. This will enable it to strengthen relationships with new clients in these industries, broaden its customer base, reduce dependence on any single market segment and mitigate risks associated with market concentration.