Corporate Report     

Published: December 15, 2024
Updated: December 15, 2024

Rulka Electricals Ltd

‘Electrifying’ new star in Maharashtra! Eyes Rs 1,000-cr revenue by 2030

A new star is rising on the industrial horizon of Maharashtra. Bhandup (an eastern suburb of Mumbai) – headquartered Rulka Electricals, founded in 2013, has started making waves as a one-stop solution for electrical and fire fighting services. The company has made rapid strides on the financial front with sales turnover reaching Rs 70 crore in fiscal 2023 and all set to cross the Rs 100-crore milestone in near future.

In fact, this is a story of two close friends, technocrates Rupesh Kasavkar and Nitin Aher, who were studying together and dreamt of becoming first-gen entrepreneurs. After completing their Graduate in engineering, they joined different companies, but after a few years the entrepreneur bug bit them again and they left their jobs and joined hands to start an electrical company in 2005. This got converted into a private limited company in fiscal 2013-14 as Rulka Electricals, and then became a public limited company in 2024 going public with an IPO which was oversubscribed six hundred times.

The company started as a labour contractor and clocked a revenue of Rs 50 lakh in its first full year of operations in FY 2005-06. That was during the information technology and telecom boom, which opened new vistas and business opportunities for electrical and fire-fighting projects.

THINKING BIG

REL started doing well and was growing comfortably. However, the promoters — Mr Kasavkar, Chairman & Managing Director, and Mr Aher, whole-time Director, realised the importance of broadbasing the company’s activities to grow big and decided to expand geographies and services offered.

During FY2015-16, the company got a major breakthrough by securing its first turnkey contract for electrical and associated work. This gave momentum to the company, and it started undertaking small-scale commercial, retail and warehousing projects for a few leading brands.

The real take-off year for REL was 2017-18. It acquired a licence from the government of Maharashtra to carry out Electrical work. This allowed it to focus on warehousing and industrial for Electrical works. That year, it secured a Rs 1 crore order for electrical and associated work for a chemical storage warehouse. Reminisces Mr Kasavkar, “The goodwill we created right from the beginning started paying off. We have always kept a ‘client first’ policy and this became our growth ladder, in addition to brand creation. A ‘core team’ concept was introduced, which also helped foster belongingness amongst senior staff.”

A-Z OF CLIENTS

The company has not looked back thereafter. One after another, it started getting different jobs from new clients as also from existing ones. Today, almost 60% of the orders received are from repeat clients. The major sectors the company caters include warehousing, commercial, retail, manufacturing, industrial and healthcare. Leading clientele include Welspun, Indospace, Horizon, D Mart, Shoppers Stop, Inox PVR, Lodha Industrial & Logistics Park, All Cargo Logistics, Honda and Ascendas Firstspace Devlopment Managemant Pvt. Ltd.

During FY20-21, REL received its single largest order of Rs 9 crore for a premium industrial and logistics park in Bhiwandi, covering an area of 46 acres. Besides, the QMS ISO 9001: 2015 certification helped the company secure projects for electrification of large retail stores and industrial plants, in addition to participation in common infrastructure projects.

Looking at the immense opportunities in the solar energy space, two years ago, REL forayed into services for solar systems, which is now picking up pace. Commenting on company’s business plans in the segment, Mr Aher said, “Due to our excellent relationship with leading clients, it has been relatively easy for us to simultaneously pitch for solar jobwork as well. We entered this domain at a slow pace becuse our team was not ready, but now we have a dedicated team that has the expertise to execute solar contracts, including turnkey projects, in a big way. We are seriously pursuing this domain because of the tremendous scope it provides.”

‘FIRE’ VERTICAL

On the fire-fighting work, Mr Kasavkar said, “This particular vertical is very close to our heart as we have been doing very good work, and it possesses equally promising opportunities. More importantly, we have developed a high level of competency in fire-fighting projects, which has been acknowledged by our clients.” The company has expanded its ambit in this area by adding fire detection product installation, testing, commissioning and preventive maintenance, which have started giving an encouraging response. This vertical contributes almost 40% to the company’s revenue.

Mr Aher is bullish on the logistics business. He explains, “As a result of the organised and online retail cult, warehousing is required at the outskirts as well as within the city because time is the biggest challenge. They can’t afford to delay in delivering any order. Hence, in order to compete with peers, they are left with no option but to become equally prompt and cater to customers in the quickest possible timeframe.”

He adds, “As a result, the city warehousing concept is not now just confined to tier-I cities. It has expanded across tier-II and tier-III cities in India and has opened up ample business opportunities for a company like ours. According to a study, the movement of goods will be 4x in the next five years. Warehousing is the backbone of any growing economy.”

EYE ON PROFITS

Importantly, since 2015, the company has achieved a CAGR of 33% with good EBITDA and net profit margins. Notes Mr Kasavkar, “We are not interested in just volume growth. It has to be well-supported with a reasonably motivational profit margin. This has been our practice all along, and I am happy to share that we have been highly successful in maintaining this momentum. Meticulous planning and time-bound execution by our technical team has enabled us to achieve this success. As a result, you will find almost 8% to 8.5% NPM in our financials, which is considered a benchmark performance.”

The management firmly believes in team building. It boasts of a staff strength of over 120 technical personnel who are not only qualified in different domains but are welltrained and have the experience to execute any complex job in a spirit of teamwork. Points out Mr Aher, “We are proud of our technical team as they have helped take REL to new heights.”

During May 2024, the company came out with its maiden IPO using the National Stock Exchange’s ‘Emerge’ platform. It raised Rs 19.80 crore by issuing 8,42,400 fresh equity shares of Rs 10 each at Rs 235 per share (Rs 225 premium), coupled with OFS of 2,80,800 shares aggregating Rs 6.60 crore at the same issue price

I.P.O. SUCCESS

The company got an overwhelming response as the IPO got oversubscribed more than 600 times. Post-IPO, the equity capital now stands at Rs 425.84 lakh wherein the promoter group holds 69.5%, private equity 3%, employees 1.5% and the public around 26%. Bank of America has invested around Rs 1.5 crore in the company. The IPO proceeds have been largely deployed for working capital. The company is nearly debt-free and avails bank facilities only to meet its working capital requirements.

FINANCIALS

On the financial front, the company has achieved revenues of Rs 71 crore in FY24, with a net profit of Rs 6.11 crore on its then equity capital of Rs 241.60 lakh, translating into an EPS of Rs 17.99. In the first six months of the current fiscal, revenues reached Rs 30 crore and PAT was Rs 94 lakh, largely because of higher depreciation and amortisation expenses of Rs 6.23 crore, which was a mere Rs 15 lakhs during the twelve months ended March 2024. Considering the current order book of Rs 80 crore and its execution timeframe, it can be safely estimated that the company will cross Rs 85 crore in revenues and PAT of around Rs 8 crore for the full year ending March 31, 2025, on its expanded equity capital of Rs 425.84 lakh with a Rs 10 face value.

GROWTH VERTICALS

The company has made its foundation strong by nurturing various verticals. Moreover, most of these verticals have a strong potential to become growth drivers for REL. The company has started working towards its ambitious goal of reaching Rs 1,000 crore revenues by 2030. An unwavering belief supported by totally committed technocrat-promoters is sure to accelerate REL’s growth journey. At current market price of Rs. 316, the company is being valued at Rs. 134 crore.