IPO bound ASK Automotive plans Rs 400 crore investment capex
IPO opens on November 7. Price band is Rs 268-Rs 282 per share.
ASK Automotive which reported a turnover of Rs 2,555 crore in FY23, aims to invest roughly Rs 400 crore for expansion of operations. ASK Automotive is planning to raise Rs 854 crore from the issue of 2.9 crore shares in an offer for sale, and the company's price band is Rs 268-Rs 282 per share.
Kuldeep Singh Rathee, Chairman and Managing Director of ASK Automotive Limited, told Autocar Professional that the component manufacturer is well capitalised to fund the Rs 400 crore expansion plan through internal accruals.
The company, which has nearly a 50% market share in the Advanced Braking System (ABS), Aluminium Lightweight Precision Solutions (ALPS), and Safety Control Cables (SCc) businesses, will expand operations by adding two additional manufacturing sites in Bhiwadi, Rajasthan, and Kolar, Karnataka, taking its total manufacturing facilities to 17.
Rathee told Autocar Professional that the component maker has on-boarded nine new EV OEMs this year and is seeing strong volumes from both its traditional ICE and EV businesses.
He said the company's revenue from the EV portfolio to increase from Rs 112.71 crores in FY22 to 517.71 crore in FY23 as its R&D team develops 60 new products.
To consolidate its core business in braking systems, the component manufacturer recently increased its brake shoe capabilities from 192 million units in FY22 to 237 million in FY23.
Furthermore, the company stated that it intends to increase its 9 percent market share in ALPS solutions for both ICE and EV two-wheeler OEMs, with synergies seen in exploring cross-selling options between the ALP and SCC solutions businesses.
Commenting about the export performance Rathee said that although exports are around 3.5 percent of the total of its total operations, the company plans to sharpen its export focus to capitalise on the global OEMs' China+1 strategy. ASK components FY 23 export revenues for the full year totalled Rs 929.68 crore, accounting for approximately 3.64 percent of total revenue.
Rathee stated that the company intends to "diversify the geographies we serve as well as target four-wheeler OEMs and their Tier 1 suppliers to broaden its business scope beyond two-wheelers."
ASK's top three customers account for more than half of the company's revenue, with the company's single largest customer accounting for roughly 30% of total revenue.
ASK Components also has a joint venture with the Brazilian firm Fras-Le SA, to which it has granted a 5- to 10-year license for commercial vehicle linings and brake pads for export into ASEAN, Sri Lanka, Bangladesh, and Nepal markets.
Rathee stated that for the last 4-5 years, the company has been testing its products for the heavy commercial vehicle segment, in which ASK owns 49% and Fras Le owns the remaining 51%. "Last year, we signed up two new CV customers, supplies started, and the joint venture turned around. He added, "The JV also exports and has export bases in 42 countries."
He stated that they have revised material cost contracts with all OEMs and are protected from cost volatility through the use of proper hedging mechanisms.
He stated that the company's goal going forward will be to increase its 8% market share in ALPS solutions.
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