Sandhar Technologies to raise Rs 300 crore through IPO

Sandhar Technologies, the manufacturer of vehicle locking systems and rear view mirrors, will issue equity shares to raise Rs 300 crore after it received a go-ahead it from the Securities and Exchange Board of India.

The offer will be for fresh sale of 64 lakh shares by GTI Capital Beta, one of the two private equity investors who had entered the company in 2012. The price band has been fixed from Rs 327 to Rs 332 per share. The offer will open for subscription on March 19 and close on March 21.

The promoter’s stake in the company will stand reduced to 70 percent from the current 83 percent post the initial public offering (IPO). GTI Capital is off-loading 17 percent stake in the company. Actis Group is the other private equity player.

From the proceeds raised, the company intends to use about Rs 225 crore for repaying debt, which as today stands at Rs 520 crore. The balance will be used for general corporate purposes.

“As a result of the reduced outstanding debt, we will be saving on loan repayment, which at present is Rs 90 crore," said Arvind Joshi, director and chief financial officer and company secretary, Sandhar Technologies.

The company is working to add eight new plants, all of which will come up in different parts of the country, over the next 6-8 months. This is in addition to the 32 plants already operational, including two in Spain and one in Mexico.

As of the first half of the current financial year the company recorded consolidated revenues of Rs 990 crore and a profit after tax of Rs 34.6 crore. It is the leader in locking mechanism in India with about 28 percent share coming from Hero Motocorp, the country’s largest two-wheeler maker. This business unit contributes 23 percent to its total revenues. Over the past five years the company invested Rs 650 crore towards expansion and research and development.

Sandhar supplies directly to about 79 two-wheeler, car and off highway manufacturing companies also known as original equipment manufacturers. These includes Honda, TVS Motor Company, Hyundai, Ashok Leyland, Yamaha, Tata Motors among others.

The company is present in 21 product categories such as door handles, vision systems, sheet metal components, auto electricals. Presently about 58 percent of its revenue comes from two-wheelers, 31 percent from passenger four wheelers (including Tier part suppliers) and the 9 percent from off-highway players.