INTRODUCTION

DCX Systems Ltd. commenced operations in 2011 and has been a preferred Indian Offset Partner (“IOP”) for foreign original equipment manufacturers (“OEMs”) for executing aerospace and defence manufacturing projects. The company is among the leading Indian players in manufacturing electronic sub-systems and cable harnesses in terms of manufacturing capability in the defence and aerospace sector. The company is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies. They classify their operations under the following business verticals: System Integration: they undertake system integration in areas of radar systems, sensors, electronic warfare, missiles, and communication systems. They provide product assembly and system integration services of various complexities along with product repair support for the parts that they manufacture. Cable and Wire Harness Assemblies: They manufacture cables and wire harnesses assemblies such as radio frequency cables, co-axial, mixed-signal, power, and data cables for the aerospace and defence industries as per our customers' requirements.  Kitting: They also supply assembly-ready kits of electronic and electro-mechanical parts. In addition, the company also undertakes certain job work services, including the assembly and testing of materials supplied directly by our customers.

RATIONALE

As started in the RHP, there are four objectives for floating Rs 500 cr IPO. Rs 110 cr will be used for full or part payment of borrowings availed by Company, Rs 160 cr for funding working capital requirements, around 44.83 cr for investment in subsidiary to fund its capital expenditure expenses, Rs 100 cr offer for sale by existing shareholder and some for general corporate purposes. The Defence Research and Development Organization has announced the indigenous development of roughly 108 systems and sub-systems which is expected to generate demand for cables and connectors across the Indian defence environment. The Indian government has also banned approximately 101 items within the defence-based imports segment and have also introduced the third positive indigenization list that bans the import of 780 LRU. These initiatives are expected to boost indigenous manufacturing within India. They operate through their manufacturing facility located at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru. As of June 30, 2022, they had 26 customers in Israel, United States, Korea and India, including certain Fortune 500 companies. Their top three customers accounted for 73.26%, 86.90%, 80.55% and 96.83% of revenue from operations in Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022. RASPL (subsidiary) is in the process of setting up an additional manufacturing facility for EMS at the Company's existing premises which will have facilities for design, development, manufacturing, qualification and life cycle support of electronic and electro  mechanical systems. The company derives a significant portion of revenue from operations from system integration business which involves the manufacture and supply of electronic sub-systems involved in the defence and aerospace sector. In Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022, revenue from operations from our system integration vertical  was 82.75%, 96.09%, 85.27%, 87.95% and 96.36%. Company's revenue is influenced by the currencies of countries to which they export products, largely being US dollar. As shown through data, they have been shifting revenue percentage from export customer to domestic customer. Percentage of Revenue from Sale of Product in fiscal 2022 from exports customers lowered from 55.73% to 47.04% and domestic gained from 44.27% to 52.96% in fiscal year 2022 on the consolidated basis. Debt-to-equity ratio as of March 31, 2020, 2021 and 2022 and  June 30, 2022 was 7.80, 2.91, 4.27, 2.25 and 4.05. DCX Systems reported a net profit of Rs 29.56 cr with revenue of Rs 683.24 crore for the financial year 2020-21. The company also has a strong order book of around Rs 2,500 cr.