Safety Controls & Devices IPO

The company was originally incorporated on June 1, 2015 as Safety Controls & Devices Private Limited under the Companies Act, 2013. Later, it was converted into a public limited company and renamed Safety Controls & Devices Limited on October 10, 2023.

Registered Office

Company Evolution Timeline

Sector and Industry

SCDL operates in a specialized niche of the Indian power infrastructure market. The company provides end-to-end execution services, from designing and procuring electrical systems to installation, testing, commissioning and project handover.

Products and Services Offered

The company’s business model is project-driven. Its key offerings include:

• Construction of electrical substations

• Power distribution and transmission systems

• Industrial electrification works

• Electrical control and protection systems

• Procurement and installation of electrical equipment

• Testing and commissioning of projects

• Turnkey EPC services for government and private sector clients

The company largely serves:

• State electricity boards

• Government agencies

• Public utilities

• Industrial customers

• Infrastructure developers

Safety Controls & Devices operates in the Indian power transmission and distribution infrastructure market. This sector has witnessed strong growth due to rising electricity demand, urbanization, renewable energy integration, and large-scale government spending on infrastructure.

Indian Power Infrastructure Market

India is among the fastest-growing electricity markets globally. The country’s power demand has increased sharply due to:

• Expanding manufacturing activity

• Urban infrastructure development

• Growth in commercial real estate

• Rising household electrification

• Renewable energy integration

According to government and industry estimates, India’s power transmission and distribution market is expected to continue growing at a double-digit rate over the next several years.

Key Drivers of Growth

The central government has launched several initiatives such as:

• Revamped Distribution Sector Scheme (RDSS)

• Green Energy Corridor

• Smart Metering Mission

• Deen Dayal Upadhyaya Gram Jyoti Yojana

• PM Gati Shakti

These initiatives are expected to increase capital expenditure in the power infrastructure sector and benefit companies like SCDL.

Market Outlook

The company is positioned in a market where project execution capability, regulatory compliance, and government relationships are critical competitive advantages.

Safety Controls & Devices Limited functions as an EPC contractor. It executes projects involving installation of electrical infrastructure for utilities, industries and public sector customers.

Its business chain typically includes:

1. Tendering and project acquisition

2. Engineering and design

3. Procurement of materials and equipment

4. Installation and commissioning

5. Project completion and maintenance support

Business Value Chain

The company acts as an intermediary between equipment suppliers and end users, creating value through project execution expertise.

Customer Profile

The company’s position in the value chain is important because it does not manufacture electrical equipment itself. Instead, it earns revenue by integrating, installing and delivering complete power infrastructure projects.

Because SCDL operates in the power infrastructure and EPC sector, its business is influenced by multiple laws, technical standards and government regulations.

Major Applicable Laws

Sector-Specific Compliance Requirements

The company must comply with:

• Electrical safety standards

• State utility tender norms

• Contractor registration requirements

• Quality certifications for electrical installations

• Technical approvals for project commissioning

In addition, EPC companies involved in government projects often require:

• Vendor approvals

• Registration with state electricity utilities

• Performance guarantees

• Bank guarantees and bid security

The DRHP identifies multiple business and financial risks that may affect company performance and investor returns.

Key Business Risks

Financial Risks

The DRHP specifically notes that there has been no prior public market for the company’s shares. Therefore, investors cannot rely on historical market valuation.

Operational Risks

• Dependence on availability of transformers, switchgear, cables and other equipment

• Labour shortages at project sites

• Delays in regulatory approvals

• Technical failures during commissioning

• Safety incidents at project sites

The company is promoted by:

The promoters have played a central role in establishing and expanding the company since its incorporation in 2015.

Promoter Group Contribution

• Strategic planning and business development

• Building relationships with utilities and customers

• Expanding EPC execution capability

• Managing day-to-day operations and project execution

The company remains promoter-driven, which means decision-making is concentrated with the founding family.

The DRHP states that the company has identified group companies and related entities in accordance with SEBI ICDR Regulations and related party transaction disclosures. A group company includes those entities that have had business dealings or related party transactions with SCDL.

At present, the prospectus suggests that group entities are linked through:

• Common promoters

• Common management

• Shared business interests

• Related party transactions

The company’s leadership team includes promoters, directors and key managerial personnel.

Key Managerial Personnel

The board is expected to include:

• Executive directors

• Non-executive directors

• Independent directors

The company has constituted its board committees in September 2024 as part of IPO readiness.

To comply with the Companies Act and SEBI regulations, the company has established a governance framework.

Board Committees

All these committees were constituted on September 19, 2024.

The company has also adopted a materiality policy for identifying:

• Material litigation

• Group companies

• Significant creditors

The DRHP includes a section on “Outstanding Litigation and Material Developments”, indicating that the company, promoters and directors may be involved in certain legal or regulatory matters.

Typical Categories of Litigation

Investors should review the litigation section carefully because:

• Large claims may affect profitability

• Legal disputes can delay projects

• Adverse judgments may damage reputation

Safety Controls & Devices Limited requires several registrations, approvals and statutory permissions to lawfully execute electrical EPC and infrastructure projects. Since the company works in the power infrastructure segment, it must maintain both corporate and technical approvals.

Key Licenses and Approvals

The company also needs periodic approvals from state electricity distribution companies and utility agencies to participate in tenders, execute projects and obtain commissioning approvals for substations and electrical systems.

The company’s management has indicated that its future growth will be driven by expanding its EPC order book and strengthening its presence in the power infrastructure segment.

Management View on Business Environment

Management believes that the Indian power infrastructure industry is entering a strong growth phase because of:

• Rising electricity demand

• Government spending on transmission and distribution projects

• Renewable energy expansion

• Urbanization and industrial development

Core Business Strategy

Growth Priorities

The company intends to:

• Participate in larger government tenders

• Expand its team and project execution capacity

• Improve internal systems and financial controls

• Use the IPO to build credibility in the market

Management also expects that becoming a listed company will improve its ability to secure larger contracts and better banking facilities.

The IPO is a fresh issue of up to 60,00,000 equity shares. There is no offer for sale, which means the entire money raised will go to the company and not to existing shareholders.

Main Objects of the Issue

The company’s most important objective is to strengthen working capital because EPC projects require large upfront spending.

Why Working Capital Is Crucial

The company must spend on:

• Raw materials

• Labour and wages

• Transportation and logistics

• Project mobilization

• Site expenses

before it receives payment from clients.

A stronger working capital base can help:

• Reduce dependence on short-term borrowings

• Improve project execution speed

• Increase ability to bid for larger contracts

The final issue price has not yet been disclosed in the DRHP. The company will decide the price band in consultation with the Book Running Lead Manager before the IPO opens.

Factors Used to Determine IPO Price

Typical Peer Comparison Parameters

Investors generally compare the company with:

• SME-listed EPC companies

• Power infrastructure contractors

• Electrical engineering companies

The IPO price is likely to depend on:

• Historical profitability

• Growth in revenue

• Order book visibility

• Sector outlook

• Peer valuation multiples

Before the IPO, the company is owned entirely by the promoters and promoter group. After the issue, fresh shares will be issued and the promoter holding will dilute.

Pre-Issue and Post-Issue Capital Structure

Impact of IPO on Capital Structure

The issue and net issue will form a specified percentage of the post-issue paid-up capital, which will be finalized once the number of outstanding shares and issue price are determined.

The company’s post-listing shareholding pattern will include promoters, public investors and market makers.

Broad Post-Issue Ownership Structure

The DRHP specifies the following allocation structure:

The company delivered strong growth in FY2025, with total income increasing by 126.5% and PAT rising by 124.2% compared with FY2024.

Year-on-Year Growth

The company’s borrowings mainly comprise working capital loans, cash credit limits and bank guarantees used to execute EPC projects. Even though borrowings increased in absolute terms in FY2025, leverage improved because net worth rose faster than debt.

Planned Use of IPO Proceeds Toward Debt

Working Capital Cycle

The company’s cash flow remains heavily dependent on collection of receivables from government and utility customers. Debtor days of 315 indicate that project payments take almost 10 months to realize, creating significant working capital pressure.

The sharp improvement in ROE and ROCE during FY2025 reflects higher profitability and better utilization of capital. At the same time, debt-to-equity reduced significantly, indicating that the balance sheet became stronger despite higher borrowing requirements.

Safety Controls & Devices Limited has not declared a formal long-term dividend policy in the DRHP. The company has indicated that future dividend decisions will depend on business requirements, cash flow generation, working capital needs and profitability.

Given that the company operates in the EPC and power infrastructure sector, management is likely to prioritize reinvestment of profits over regular dividend distribution in the near term.

Factors That Will Influence Future Dividends

Likely Dividend Approach

Because the company plans to use IPO proceeds for working capital and business expansion, investors should view the company primarily as a growth-oriented investment rather than a dividend-yield stock.

The DRHP discloses that Safety Controls & Devices Limited has entered into related party transactions with promoters, promoter group entities and other associated businesses. These transactions are common in closely held and promoter-driven businesses but require careful monitoring after listing.

Nature of Related Party Transactions

Why Related Party Transactions Matter

Post-IPO Expectations

After listing, the company will need to comply with:

• SEBI LODR Regulations

• Audit Committee approval norms

• Shareholder approval for material related party transactions

This should improve transparency and reduce the risk of unfair transactions.

The company has entered into several material agreements that are important for its business operations and the IPO process.

Business-Related Contracts

IPO-Related Agreements

The Safety Controls & Devices IPO is a 100% book-built issue and consists only of a fresh issue of equity shares. There is no offer for sale by existing shareholders.

Main IPO Details

Investor Category Allocation

Anchor Investor Allocation

After listing, investors who purchase shares of Safety Controls & Devices Limited will become equity shareholders and will receive statutory rights under the Companies Act and SEBI regulations.

Main Rights of Shareholders

Rights in Case of Company Actions

The company has made additional disclosures in the DRHP to comply with SEBI ICDR Regulations, Companies Act and SME listing norms.

Key Mandatory Disclosures

Additional SME IPO Disclosures

Promoter Lock-In Requirement