Auto components manufacturer Sandhar Technologies has approached market regulator SEBI to bring its IPO and has filed draft red herring prospectus (DRHP). In its prospectus, the Gurgaon-based company said it plans to raise at least INR3 billion through the IPO which will be a mix of fresh shares and an offer for sale (OFS). The IPO will be managed by ICICI Securities, IDFC Securities, IIFL Holdings and Jefferies India.
Promoted by Jayant Davar, Sandhar Technologies plans to use the proceeds for establishment of a new factory in Tamil Nadu as well as to reduce debt. Establishing a new production plant in Hosur will involve INR517 million while INR1.8 billion will be used towards debt repayment. The company has already acquired land in Krishnagiri for setting up the manufacturing plant.
GTI to part exit
Apart from the INR3 billion which the company will receive, the IPO will also involve an OFS of 5.11 million shares by existing investors. These shares will be offered by GTI Capital which owns 8.93 million shares or 17.47% stake in Sandhar. In 2012, GTI acquired 10.75% equity shares in Sandhar from UK’s Actis. The private equity firm subsequently increased its stake in the company 17.47% in 2014.
In the fiscal year ended March 2015, Sandhar reported earnings of INR348.37 million on a top line of INR12.62 billion. Both figures were up from FY 2014.
Sandhar’s traditional client base includes Hero, Honda Cars, TVS, Royal Enfield, Bosch, Tata Motors, and Ashok Leyland. In recent years, it has also added construction machinery OEMs such as Caterpillar, JCB, Mahindra, L&T Construction, and Hyundai Construction in its client list.
Joining the bandwagon
By filing IPO papers, Sandhar Technologies joins the growing list of component manufacturers seeking to list on stock markets. Yesterday, Punjab-based GNA Axles also submitted its draft prospectus with SEBI to launch IPO. In May, Precision Camshafts received SEBI approved to bring its IPO. The Solapur-based company is yet to launch the public offer.