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GTI Capital to sell bulk of its stake in auto parts maker Sandhar’s IPO

08 December, 2017

Sandhar Technologies Ltd, which counts India-focussed private equity firm GTI Capital Beta Pvt. Ltd as its backer, has refiled its draft red herring prospectus with the Securities and Exchange Board of India for its initial public offering.

The Delhi-based auto components maker plans to issue fresh shares worth Rs 300 crore in the IPO while sector-agnostic investor GTI Capital will offer 8 million shares for sale.

The company had received a green signal from the capital markets regulator for an IPO more than two years ago, but could not execute its plans.

After the IPO Sandhar will join nearly 50 listed peers such as Minda Industries Ltd, JBM Auto Ltd, Motherson Sumi Systems, Bharat Gears and GNA Axles Ltd, which listed on the stock exchanges last year after a mega subscription to its IPO.

Here’s a snapshot of Sandhar Technologies’ proposed IPO:

Issue
The IPO comprises a fresh issue of shares worth Rs 300 crore and an offer for sale of 8 million shares from GTI Capital.

GTI, which had first invested in December 2012, was founded by Gaurav Dalmia, Jonathan Schulhof and Madhav Dhar. It invests in Indian or India-related businesses, and looks to play an active role in the companies it invests in.

GTI had first invested in Sandhar in December 2012 and holds a little more than 8.93 million shares, representing 17.47% of the pre-issue equity capital. In the offering proposed two years ago, GTI Capital had offered to sell up to 5.11 million shares.

Use of proceeds
The company will use Rs 225 crore of the net fresh proceeds towards repayment or prepayment of certain loans. It will use the balance amount towards general corporate purposes.

The portion from the secondary sale will go to GTI Capital.

Bankers
ICICI Securities and Axis Capital are merchant bankers managing the IPO.

Lawyers
Khaitan & Co is the legal counsel to the offer.

Company
Sandhar was incorporated in 1987 by first-generation entrepreneur Jayant Davar, co-chairman and managing director of the company, who has close to 30 years of experience in automotive component manufacturing.

The company focuses on safety and security systems in vehicles. It has 29 factories across eight states in India, besides two facilities in Spain and one in Mexico. It has one assembly and packaging centre in Poland. The company is setting up eight more units in India.

Sandhar had commenced operations as a supplier to Hero MotoCorp (formerly Hero Honda Motors Ltd) for sheet metal components.

At present, its portfolio consists of 79 Indian and global vehicle manufacturers across various segments. It makes around 21 categories of products that cater to different industry segments including two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles and tractors.

The product portfolio includes safety and security systems such as lock assemblies, mirror assemblies, cabins, aluminium spools, spindles and hubs. It also includes other categories such as wheel assemblies, sheet metal components, dies and moulds, crane and tractor parts, plastic parts such as door handles, panels for televisions, and cabinets for air coolers and handle bar assemblies.

As of 31 October 2017, the company had a total workforce of 7,744 individuals comprising 2,363 employees and 5,381 people on a contract basis.

Its key clients are Royal Enfield, Honda Cars, Tata Motors, Ashok Leyland, Caterpillar and Bosch.

Financials
The company reported consolidated net profit of Rs 34.57 crore for the six months ended September 2017 on net consolidated revenue (from operations) of Rs 989.40 crore.

For the financial year 2016-17, it reported a net profit of Rs 39.55 crore on revenue of Rs 1,626.87 crore.  Its revenue for the four years through 2016-17 grew at a compound annual pace of 8.8%.

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GTI Capital to sell bulk of its stake in auto parts maker Sandhar’s IPO

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