Private equity firm Blue River Capital is completely exiting its five-year-old investment in auto ancillary company Aurangabad Electricals Ltd in the latter’s upcoming IPO. The company has filed its draft red herring prospectus (DRHP) with market regulator SEBI for its maiden offering where it is looking to dilute nearly 32 per cent stake. While Blue River’s sale of 22 per cent stake accounts for three-fifths of the issue, the remaining comprises a primary issue.

Blue River Capital had acquired 22.11 per cent stake in Aurangabad Electricals for Rs 45.12 crore in March 2006 in one of its first investments. Another one of its portfolio companies, KMC Constructions, is also reported to be looking at an IPO soon. Blue Rivers’ other portfolio firms include City Union Bank, Rane Holdings, Wilson Sandhu Logistics, International Print-O-Pac and KPR Mills.

Aurangabad Electricals is involved in automotive component manufacturing with capabilities to develop products such as fully finished and semi-finished aluminium castings, high tensile steel fasteners and auto electrical components. The funds raised from the fresh issue will be used for capex, which involves spending Rs 49 crore for the purchase of production equipment and supporting tools.

The company’s joint venture – OMR Bagla Automotive Systems India Ltd – primarily manufactures high pressure die-casting products for four-wheelers. Another associate firm, BG LI-IN Electricals Ltd, is a collaboration with LI-IN Electricals of Taiwan and it manufactures a wide range of auto electrical components such as flashers, ignition coils, sensors and relays for automotives. Aurangabad Wheels and Rims Private Ltd is another associate company that currently provides backend support to Aurangabad Electricals in designing and manufacturing dies.

The company’s largest customer is Bajaj Auto Ltd, accounting for 85 per cent of its sales in FY11. Other key clients include Fiat, Mahindra Two Wheelers Ltd, Hero Motor Ltd, Magna Rico and OMR Italy, among others.

From FY07 to FY11, the company’s income grew at a CAGR of 10.45 per cent to Rs 508.91 crore, with the firm moving from a net loss of Rs 23 lakh to a net profit of Rs 13.06 crore in FY11. While aluminium castings account for 85 per cent of its revenues, the remaining comes from segments like fasteners and auto electricals.

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