Marine Electricals – Sailing Through a Sustainable Future

We see a flood of discussion on Marine Electricals recently. We have kept this company under our radar since it was around 400 Cr Mcap. You will also find many tweets about Marine from @Manojeet_Das account.

About the company

Marine Electricals (India) Limited was established on December 4, 2007. The Group primarily focuses on manufacturing and selling a wide range of electrical and electronic components for marine and industrial applications. These components include switch-gears, control-gears, and other related products. Additionally, they offer services such as design, fabrication, and annual maintenance contracts for electrical and electronic installations, both domestically and internationally. The Group holds a significant market share in supplying these components for naval and commercial ships. Another major aspect of their business involves providing low and medium voltage power distribution equipment to various industries. Recently, they have also ventured into the EV charging segment.

About the management

The company boasts a highly experienced top management team with a strong background in their respective fields. Each member of the top management brings a wealth of knowledge and expertise to the table, acquired through years of practical experience and successful leadership roles.

Few interactions with the management

• Everything that is electrical and electronics that goes onboard on either a Navy Ship or a Commercial Ship is either manufactured or supplied by Marine Electricals.
• Tier 1 supplier to the Indian Navy.
• Complete Software and Hardware solution for EV chargers.
• Started a third plant in Goa with a manufacturing space of 1.3 lakh sq. ft. to support the Electric Panel and EV business, effectively doubling the company’s capacity.
• The company currently experiences a high working capital cycle due to significant sales in the fourth quarter and pending payments from a few EPC contracts. Plans are in place to reduce the working capital cycle starting from FY23.
• Margins are expected to increase as the company focuses on its core business and abstains from participating in EPC solar projects.
• A promising pipeline of projects is anticipated for the next 5 to 10 years.
• The company remains up-to-date with global R&D standards and actively engages in the development of new products, investing 5% of sales into R&D.
• While Marine Electricals handles all aspects from designing to manufacturing for the Industrial, Navy, and Marine segments, some of the product design for EVs may be outsourced.
• Major capex plans are not anticipated in the coming years.

The CTO of Marine Electricals has recently introduced a new product, the Stainless Steel Switch Board. This innovative product finds applications in diverse industries such as mining, pharmaceuticals, and the food industry.

Marine Electricals: Main lines of Business

Industrial

Industries served: Focuses on Power Plant, Automotive Industry, Pharmaceuticals, Oil & Gas, Chemicals

Products:

1. Bloksets: Marine Electricals holds a prominent position as one of the largest Schneider Licensee Manufacturers of the Blokset range of OEM panels in India. The company established a partnership with Schneider Electric India in 2004-2005, allowing them to manufacture Blokset Panels for marketing and supply in the western region of India. Bloksets, which are low voltage switchboards, are also manufactured by Siemens, and Marine Electricals holds the license for their production as well.
2. MEpoweR3: It is Marine Electricals’ medium voltage offering, developed in collaboration with Schneider Electric. This product line is entirely designed in-house, with inputs from Schneider Electric, highlighting the expertise and capabilities of Marine Electricals. The MEpoweR3 range includes metal clad switchgear panels in various voltage options, such as 12KV, 24KV, and 36KV. These switchgear panels are equipped with Vacuum Circuit Breakers (VCB) and SF6 circuit breakers, which are supplied by Schneider Electric. The partnership with Schneider Electric ensures the use of reliable and high-quality components in the MEpoweR3 range, offering efficient and safe medium voltage solutions to customers.
3. MEcubE3: The MEcubE3 panels manufactured by Marine Electricals offer customers the flexibility to choose from a range of major switchgear options according to their specific requirements. These panels are produced at Marine Electricals’ state-of-the-art manufacturing facility. The MEcubE3 panels offer a wide variety of options, allowing customers to tailor their electrical solutions to meet their unique needs and preferences.

Industrial Segment Clientele

Marine

Marine Electrical serves various end customer markets from navy vessels to merchant & cargo ships, ferries, luxury yachts, offshore vessels and special vessels. They serve as a comprehensive system integrator, assuming complete technical responsibility for the electrical and electronic systems on board these vessels.

Marine Electricals generates revenue through three primary streams in the marine division. Firstly, they supply products and solutions for new ships under construction at shipyards, providing the necessary electrical and electronic components and systems. Secondly, they offer repair and maintenance services for existing electrical and electronic systems on ships, ensuring their smooth operation and reliability. Lastly, Marine Electricals engages in service contracts and annual maintenance contracts, providing ongoing support and maintenance services to customers, thus strengthening long-term relationships.

Products:

1. Power Generation and Distribution: This includes Power Supply, Power Management, Power,Distribution, Consoles.
2. Navigation and Communication –  NAVCOM systems including navigation radars.
3. Electrical Propulsion – Customized electrical propulsion solutions for diverse vessels’ needs and regulations.
4. Integrated Platform Management System (IPMS) – MEACOS 3000: Redundant, automated IPMS for monitoring and controlling ship systems, featuring configurable workstations and reliable communication infrastructure.
5. Information Technology – Efficient IT network design and installation for complex ships.
6. Engineering and Project Management – Marine Electricals provides extensive support in defining technical specifications, system selection, cable routing, light arrangement, electrical load balance, compliance with regulations, and documentation for ship projects.

(You can go through their entire product portfolio in the Marine Segment)

Marine Segment Clientele

(You can check out their list of partners)

Marine Electricals: Order Book

Their growing Order Book shows their Strong Position in the Marine and Industrial Segment.

Marine Electricals: Growth Triggers

• Venturing into EV charging segment through partnership with Evigo

Marine Electricals is actively involved in import substitution efforts for EV chargers, aiming to reduce reliance on imports from China. By developing and manufacturing EV chargers locally, they contribute to domestic production and promote self-sufficiency in the EV charging segment. This strategic move aligns with the broader objective of supporting indigenous manufacturing and reducing dependency on imports. Marine Electricals’ focus on import substitution enhances the availability of EV charging infrastructure and strengthens the domestic EV ecosystem. The recent discovery of Lithium deposits in J&K and Rajasthan might decrease the dependency on imports even further.

Evigo has recently entered into a Revenue Sharing agreement with Pune Municipal Corporation (PMC) for a period of 8 years.

The demand for Electric Vehicles is expected to increase multi-fold by 2030 backed by environmental awareness, and government incentives.

• Data Centers will boost the growth for Industry Segment

The management claims to have a leadership position in the fast growing data center complex. They receive repeat orders from the customers which is a testimony for quality and performance, timely delivery and strong customer relationship.

• Exploring Opportunities

Marine Electricals has taken steps to expand both horizontally and vertically for better risk-reward ratio.

Marine Electricals – MOAT

Marine Electricals – Risks (Can be taken with a pinch of salt)

• They are involved in the B2G (Business to Government) segment. This segment is generally prone to deferred payments.
• Growing competition may put pressure on the Gross and operating margins of the company.
• The company may face challenges in responding quickly to disruptions within the capital-intensive industry in which they operate because it involves significant investments in infrastructure, equipment, and long lead times for manufacturing and supply chain processes.

Sources:

• https://www.marineelectricals.com/images/pdf/Marine-Investor-Presentation.pdf
• https://marineelectricals.com/images/pdf/Marine-Electricals-India-Limited-DRHP.pdf
• https://www.marineelectricals.com/images/report/Marine-Electricals-Annual-Report-2022.pdf
• https://marineelectricals.com/images/disclosure-reports/EarningsCallTranscriptMEIL.pdf

See you next time.

Until then… Stay Prudent!

Also read:

Amba Enterprises – Transforming through Transformers

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Disclaimer: This article is provided for informational purposes only and should not be considered investment advice.