From mould bases to 155mm artillery shells — India's boldest SME defence pivot

Sunita Tools is India's largest mould base manufacturer by volume and value, now executing one of the boldest SME pivots in Indian markets — into 155mm NATO-standard M107 artillery shell manufacturing. Founded in 1988 by the Pandey family in Palghar, Maharashtra, the company spent 36 years building a precision engineering business across 4 verticals (mould bases, sheet metal, die casting, machine parts) serving auto, pharma, FMCG & aerospace clients. Revenue doubled from ₹14.2 Cr (FY23) to ₹29.6 Cr (FY25) with 17% PAT margins and a virtually debt-free balance sheet (D/E 0.002). The defence pivot accelerated in 2024 with the acquisition of a ready-to-use 155mm shell manufacturing plant from T.S. Kisan & Co. Line 1 is operational at 7,500 shells/month capacity with Line 2 (10,000/month) planned for FY27. By May 2026, the company had opened a US subsidiary (Sunita Defence Inc) in Chicago, acquired 51% of New Mold Innovations LLC in Kentucky for USD 419K, and established two domestic subsidiaries. LOIs extend till FY28 with 30% advance payment terms. The thesis hinges entirely on defence execution — if shell production scales to plan (2.1 lakh units by FY28 at $250-300/unit), revenue could reach ₹400-500 Cr. But defence approvals remain unconfirmed, operating cash flow is negative (₹8.26 Cr outflow in FY25), and inventory at 62% of revenue signals heavy pre-production investment.

Sunita Tools was incorporated in 1988 as a Private Limited company in Palghar, Maharashtra by the Pandey family. For over three decades, the company quietly built India's largest mould base manufacturing operation by volume and value — serving auto, pharma, FMCG, and industrial customers. The pivot came in 2024. After converting to a Public Limited Company in January, the company acquired a ready-to-use 155mm shell manufacturing plant from T.S. Kisan & Co. — a firm with shell-making expertise dating back to 1996. Mr. Tarun Thapar, the seller, joined as Executive Director (Technical). By May 2026, Sunita had established a US subsidiary (Sunita Defence Inc) in Chicago, acquired 51% of New Mold Innovations LLC in Kentucky for USD 419K, and set up two domestic subsidiaries: Sunita Leoquip Aerospace in Ahmedabad and Sunita Imperial Aerospace in Coimbatore. From a single-facility mould maker to a multi-geography defence play in 24 months.

India's defence manufacturing sector is at an inflection point. Defence production reached ₹1.46 lakh Cr in FY25 with 92% of contracts awarded to Indian firms. 68% of the defence budget is earmarked for domestic procurement. In artillery ammunition, India is the world's largest operator of 155mm howitzers with an estimated annual requirement of 30 million rounds against domestic capacity of ~1.5 million — a 20:1 demand-supply gap. The global ammunition market is valued at $6.8 billion growing at 8% CAGR, accelerated by the post-Ukraine NATO shell shortage. India's competitive advantage comes from lower labour costs, established steel supply chains, and government policy support through defence corridors.

The Indian 155mm ammunition landscape is dominated by government-owned Advanced Weapons and Equipment India Ltd (formerly Ordnance Factory Board). No listed SME has a comparable private-sector play in 155mm shell bodies. Large defence companies (Bharat Forge, Kalyani Group) target assembled ammunition and weapons systems rather than shell body manufacturing. Sunita's positioning: (1) Ready-to-use shell plant from a firm with proven expertise since 1996, (2) NATO-standard C45E/C60 steel compatibility, (3) Cost advantage from existing precision infrastructure, (4) US subsidiary for direct NATO procurement access. In mould bases, Sunita claims India's largest by volume with no comparable listed competitor.

Total equity strengthened from ₹18.90 Cr (FY23) to ₹47.28 Cr (FY25) through preferential share allotment — share capital expanded from ~18 lakh to 61.10 lakh shares. Became virtually debt-free in August 2024 with D/E ratio of 0.002. EPS diluted from ₹16.61 to ₹8.53 due to share expansion, not earnings decline — PAT grew from ₹3.00 Cr to ₹5.09 Cr. Clean balance sheet provides headroom for defence capex without dilutive fundraising pressure.

Primary manufacturing facility at Valiv Phatta, Vasai East, Palghar, Maharashtra. Revenue capacity of ₹80-100 Cr after recent expansion, with 50 permanent employees. The 155mm M107 shell manufacturing Line 1 (capacity: 7,500 units/month) is operational. Line 2 (10,000 units/month) planned for FY27. Shell material: C45E/C60 steel, NATO-standard, priced at $250-400/unit. Subsidiaries: Sunita Leoquip Aerospace (Ahmedabad), Sunita Imperial Aerospace (Coimbatore), Sunita Defence Inc (Chicago, USA). Acquired 51% of New Mold Innovations LLC (Kentucky) — specialty grease manufacturing with 47 lakh cartridges/year capacity. Direct steel sourcing from ArcelorMittal and Jindal provides 5-10% margin improvement.

Defence vertical has Letters of Intent (LOIs) extending till FY28 with 30% advance payment terms. Sizable interim sales contract in place for 155mm shells. Shell production targets: FY26: 22,500-30,000 units, FY27: 1,30,000 units, FY28: 2,10,000 units at $250-300/unit. At full capacity, defence revenue potential of ₹400-500 Cr by FY28. EU order potential of ~EUR 350,000 from active RFQs. Management targets 60-80% CAGR for next 3 years.

Revenue has doubled in 2 years (109% CAGR) while PAT margins held at 17-21%. Became virtually debt-free in FY25 with equity strengthening to ₹47.30 Cr. EPS diluted from ₹16.61 to ₹8.53 due to share capital expansion (61.10 lakh from ~18 lakh), not earnings decline — PAT grew 70%. Customer concentration capped at 10% per customer. Direct steel sourcing from ArcelorMittal and Jindal delivers 5-10% margin improvement. However, operating cash flow negative (₹8.26 Cr outflow FY25) due to inventory build-up of ₹18.69 Cr (62% of revenue) for shell manufacturing.

Typical small-company family governance. Pandey family controls 64.7% and occupies all executive positions. Board includes independent directors per SEBI mandate but detailed governance disclosures are minimal. Related party transactions of ₹20 Cr approved — material vs ₹30 Cr revenue. US subsidiary headed by MD's son with limited disclosure. Positive signals: regular BSE filings (Reg 30 compliance), reasonable AR disclosures, disciplined 10% customer cap, debt-free status. Areas for improvement: no succession plan, no independent operational management, limited defence approval disclosure, US subsidiary governance unclear.