NSE: EPACK
The company manufactures air conditioners and small domestic appliances for ODMs (Original Design Manufacturers), in addition to key components such as heat exchangers, copper tubing, and PCBAs (Printed Circuit Board Assemblies). With more than 20 years of industry experience, EPACK has captured 24% of the market share, establishing itself as the 2nd ODM player in the industry. {10}
The trademark EPACK is owned by EPACK Polymers, a group company. The company was permitted to use the trademark under the licensing agreement, dated July 29, 2023, for a term of 25 years for a fee.
Bhiwadi and Dehradun facility has 48% utilization rate and the Andhra Pradesh facility commenced operation in December 2023 {11}:
• The installed production capacity in FY24 encompassed a wide range of products, including 1.56 million Indoor Units, 1.68 million Outdoor Units, 0.42 million Window Air Conditioners, 1.85 million Cooktops, 0.3 million Mixer Grinders, and 0.11 million Water Dispensers annually.
• The total scrap generated In FY24 amounted to 2.39 million units, reflecting the scale of their operations and material management processes.
• Total capacity utilization of the Dehradun and Bhiwadi manufacturing facilities is 48% in FY24 of total manufacturing capacity.
• The Sri City (Andhra Pradesh) manufacturing facility commenced operations in December 2023. The Sri City plant’s capacity utilization was 10% in H1 FY25. {12} The annual manufacturing capacity of the Sri City Manufacturing Facility as of December 15, 2023, is
(i) 0.66 million IDUs and 0.66 million ODUs
    (ii) 0.65 million induction cooktops, and components
Source: DRHP
Integrated Manufacturing Facilities: Uttarakhand, Rajasthan, and Andhra Pradesh coupled with 4 R&D centers in Uttar Pradesh, Uttarakhand, Rajasthan, and Andhra Pradesh.
• The company operates dedicated R&D centers in Noida, Bhiwadi, Dehradun, and Sricity equipped with endurance test labs for RACs, SDAs, and LDAs, Induction Coil Testers, Both automatic voltage testers and breakdown testers, Safety Testing Equipment, ISO/IEC 17025:2017 Accreditation. {13}
• It also develops new and improved products to meet evolving market demands like FA washing machines, room oil heaters, air fryers, tower fans, induction water heaters, and hair dryers.
• Exports have grown by 32% from FY23 to FY24, though they still represent a 2.4% of total revenue.{14}
• The company serves its products in all states in India and in Dubai, UAE.
Epack’s Long-lasting relationship with established customers
• Company is a contract manufacturer with long-standing relationships with industry leaders across various sectors. In the Room Air Conditioning (RAC) segment, it has built strong ties with clients like Blue Star, Daikin, and Carrier, maintaining an average customer relationship of over 8.7 years. In the Small Domestic Appliances (SDA) segment, it collaborates with prominent brands such as Bajaj Electricals, BSH, and Usha, with an average relationship duration of 6.3 years.
• Notably, the top 5 customers contributed a significant portion of the company’s revenue, accounting for 80% in H1 FY24 and 83% in FY23. This highlights a high level of customer concentration, which poses a potential risk to the company.{15}
Epack’s supplier network and raw material sourcing {16}
• The company has a robust supplier network which includes suppliers, in India and overseas, including from countries such as Vietnam, Thailand, and China. It is dependent on third-party suppliers for raw materials. Its supplier network comprised 342 suppliers.
• The raw materials used by the company are copper tubes, steel, aluminum sheets, plastic granules, compressors, controllers, and RAC motors. In FY24 45-50% of raw materials was imported, with ongoing efforts to minimize dependency on imports.
• It does not establish long-term contracts with its suppliers, instead, it procures raw materials through ongoing purchase orders.
Company’s customer-specified packaging and logistics
• The company handles packaging at its manufacturing facilities based on customer-provided specifications. Customer orders are typically on an ex-works basis, with the responsibility for transporting products from the manufacturing facilities resting with the customers.
Comprehensive quality control and testing framework
1.Incoming Quality Control (IQC)
2.Line Quality Control (LQC)
3.Outgoing Quality Control (OQC)
4.Performance Testing
5.Central Quality