Mahindra Sona looks to raise Rs250 crore in PE funding
The auto-parts maker is aiming to fund working capital requirements and provide a partial exit to existing investors
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Mahindra Sona Ltd, an auto-parts venture between Mahindra and Mahindra Ltd and Sona Group, is looking to raise as much as Rs.250 crore from private equity investors, according to two people familiar with the development.
“They are looking to raise money to fund working capital requirements of the company as well as to provide a partial exit to existing investors,” said the first person mentioned above, who asked to remain unidentified.
The company has already hired an investment bank to manage the sale, he added.
“The company is in the process of exploring multiple fund-raising options to meet our growth plans. Any fund-raising programme undertaken by the company is to finance the business growth of the company on a continuous basis,” Gaurav Motwane, managing director of Mahindra Sona, said in an email response to a query. “We are in the process of evaluating various options and this is at a very primary stage to make any comment on closure,” he added.
The Mumbai-based company designs and makes propeller shafts, clutches, steering joints, steering column parts and axle shafts at its plant in Nashik and supplies the parts to Indian and foreign vehicle makers.
“Auto-component manufacturers believe a fund infusion can help them expand their bandwidth outside India,” said Rajiv Mandke, an independent automotive and management consultant.
Singapore-based investor Satpal Khattar holds 13% in the company. “Not possible to respond to your queries as we are passive shareholders and none of the issues you have raised has been settled by the board,” Khattar said in an email response.
According to data from the registrar of companies (RoC), Mahindra Sona’s investors also include financial services firm IL&FS Financial Services Ltd, with a 5.25% stake. An email sent to IL&FS remained unanswered.
“Earlier, the firm had met several bankers to discuss an initial public offer. However, there was consensus among several bankers that it was a bit early for the company to go public. Hence, the company decided to opt for a round of private equity funding and delayed plans to go public,” said the second person familiar with the development cited earlier, also not wanting to be identified.
According to data available from the RoC, Mahindra Sona’s revenue rose to Rs.370.6 crore in the fiscal year 2014 from Rs.336.6 crore the previous year. Net profit rose to Rs.31.6 crore from Rs.28 crore a year ago, the data show.
The firm’s exports revenue remained stagnant in 2014, with shipments of $12.6 million, similar to that reported the previous year. The company primarily exports its products to North American truck makers.