The initial public offering of Precision Camshafts Ltd got off to a slow start on Wednesday after the auto ancillary company raised Rs 123 crore (about $18 million) from a group of anchor investors.

The issue received bids for about 6 per cent of the shares on offer at the end of the first day, according to stock-exchange data. While qualified institutional investors and non-institutional investors did not bid at all, retail investors bid for 11.5 per cent of the portion reserved for them.

This is the first IPO on Indian bourses this year and comes at a time when stock-market weakness over the past few weeks has prompted several companies to rethink their plans to launch share offerings. The performance of Precision’s IPO could set the tone for primary market issues as nearly two-and-a-half dozen Indian companies are waiting to go public.

Ahead of the IPO, the Solapur-based maker of camshafts allotted 6.61 million shares to anchor investors at Rs 186 apiece.

According to a company statement, almost all the anchor investors were domestic mutual funds. These included State Bank of India Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, IDFC Mutual Fund, Birla Sunlife Mutual Fund, and Canara Robeco Mutual Fund.

SBI Mutual Fund and IDC Mutual Fund were allotted the maximum number of shares - 1.77 million each.

The issue will close on January 29. The company has fixed a price band of Rs 180 to Rs 186 a share for the offering. It would raise as much as Rs 410 crore at the top end of the price band.

Promoted by Yatin Shah and Suhasini Shah, Precision Camshafts makes more than 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications at its plants in Solapur, Maharashtra.

It also has two joint ventures. The first, Ningbo Shenglong PCL Camshafts Company Ltd, is for machining of camshafts and the second, PCL Shenglong (Huzhou) Specialised Casting Company Ltd, is for setting up a foundry in China.

Most of its revenue comes from export of camshafts to various original equipment manufacturers directly and indirectly.

The company plans to use the proceeds of the IPO to set up a machine shop for ductile iron camshafts at the export-oriented unit in Solapur. 

While the new plant is expected to cost Rs 200 crore, the rest of the proceeds would be used for general corporate purposes. 

India Infoline, SBI Capital Markets, and HDFC Bank are the book-running lead managers to the issue.

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