Paras Defence and Space Technologies Ltd IPO

Competitive Strengths:

Some of the competitive strengths are as follows

• Diversified products and solutions offerings for both defence and space applications:

Paras Defence and Space Technologies is a leading IDDM category private sector company in India which caters to four major segments of Indian defence sector i.e., defence optics, defence electronics, EMP protection solution and heavy engineering offering one-stop solution to all their customers. The company is also the sole Indian supplier of diffraction gratings used in hyper-spectral imagers, large size optics (Source: F&S report). The company was involved in various space exploration missions, which has helped the company to develop a strong foothold in the Indian space industry by being the supplier of optics and optomechanical assemblies for these space exploration missions. Paras defence and Space Technologies provides end-to-end solutions to our customers ranging from designing, developing, manufacturing and testing increases their capability to meet specific and exclusive requirements of their customers. Apart from the above, the company’s horizontal integration makes them well positioned to undertake turnkey projects in the defence sector while also being capable of supporting major tier 1 Indian defence suppliers

• One of the few players in high precision optics manufacturing for space and defence application:

Paras Defence and Space Technologies is one of the few manufacturers in India with a comprehensive in-house capability of designing, developing and manufacturing optics for space and defence application in India. The company’s manufacturing facility in Nerul, Navi Mumbai houses equipment and machinery, inter alia, for nano technology, machining, grinding, polishing and turning coupled with a robust testing set up for measuring the performance parameters of the optical components. The company’s in-house facilities include single point diamond turning machines, grinding and polishing machines for precision optics and large size space optics, optical thin film coatings with fully equipped metrology with contact and non-contact measurements. With strong experience in working with Government space organizations on critical space missions and being the sole Indian supplier of diffractive gratings used in hyperspectral imagers and infrared lenses, the company has established ourselves well in the Indian space market.

• Strong relationships with a diverse customer base:

Paras Defence and Space Technologies has a diversified customer base which ranges from Government arms and government organizations involved in defence and space research, to various defence public sector undertakings such as Bharat Dynamics Limited, Bharat Electronics Limited and Hindustan Aeronautics Limited, to various private entities such as Tata Consultancy Services, Astra-Rafael Comsys Pvt. Ltd., Solar Industries India Limited, Alpha Design Technologies Private Limited, etc. The company also service international customers including Advanced Mechanical and Optical Systems (AMOS), Belgium, Chaban (Israel), Tae Young Optics Company Limited (South Korea), and Green Optics (South Korea). The company’s established heritage of experience in designing, developing and manufacturing components for diverse customers in defence and space sector, has enabled them to develop a deep understanding of the sectors and customers’ requirement.

Risk Factors:

Some of the risk factors are as follows

•    The business is largely dependent on contracts from the Government of India (“GoI”) and associated entities. A decline in Government budget for Defence and Space, reduction in orders, or termination of contracts can have a material impact on the business. 

•    Developing customised products and solutions and other research and development (“R&D”) activities involve risks and the company may not realize the degree of benefits initially anticipated or in a timely manner or at all. Further, such activities may not lead to satisfactory returns which would affect the business and financial condition of the company.

•    The company has sustained negative cash flows from operating and investing activities in the past and may experience earnings declines or operating losses or negative cash flows from investing activities in the future.