IPO-bound Kross eyes 30-35% uptick in topline backed by strong demand from tractor-trailer axel niche business 

Kross Limited, a specialist in trailer axles and suspension business based in Jharkhand, plans to raise Rs 500 crores from the capital markets through an initial public offering (IPO). 

Company officials present at the IPO meeting in Mumbai stated that the firm is experiencing a strong demand from the MHCV (Medium and Heavy Commercial Vehicle) and tractor industries. 

They indicated the firm is anticipating a robust 30-35 percent growth in overall operations for FY25-26, based on the current orders. The officials also mentioned that the recent completion of the new foundry line's end-to-end backward integration program will contribute to an increase in the firm's operational margins.

“With our new foundry line completing its end-to-end backward integration program recently will help the firm to increase its operational margins as well,”  they said

Kross has shown strong performance in recent years. The top line profit for FY2024 increased by 27% to Rs 620.3 crore from Rs 489 crore in FY23. Additionally, the profit after tax increased to Rs 44.9 crore from Rs 31 crore in FY23.

Sudhir Rai, Kross' Chairman, and Managing Director, told Autocar Professional that the company intends to use the net proceeds of the IPO to fund the company's capital expenditure requirements for the purchase of machinery and equipment, which will total Rs 70 crore. They will utilise Rs 90 crore for the repayment or prepayment of outstanding borrowings obtained from banks and financial institutions, and Rs 30 crore for the company's working capital requirements.

Out of the Rs 500 crore it plans to raise, promoters Sudhir Rai and Anita Rai will offload shares worth Rs 250 crore. Of this, Rs 168 crore and Rs 82 crore belong to the promoters, respectively, through the Offer for Sale (OFS) route. The remaining shares will be offered to the public for subscription.

Kross which has a capacity of manufacturing 60,000 trailer axels annually is also a major player in suspensions, truck components, and tractor components 

In the tractor trailer axle market, Kross competes with major firms such as Ramkrishna Forgings Limited, Jamna Auto Industries Limited, Automotive Axles Limited, GNA Axles Limited, and Talbros Automotive Components Limited.

The company has added new customers to its order book, including Leax Falun AB, a Swedish manufacturer of propeller shafts for commercial vehicle OEMs, and a Japanese OEM that manufactures commercial vehicles for which it has developed 6 new component families which it plans to start exporting soon.

Currently, the company operates five manufacturing facilities in Jamshedpur, Jharkhand, and is a Tier 1 supplier to Ashok Leyland and Tata International, as well as medium and large OEMs of trailer axles and suspension equipment

Apart from trailer axles and suspension assemblies, the company also offers forged and precision machined high-performance safety critical parts for medium and heavy commercial vehicles, as well as farm machinery.

The IPO will have a price band of Rs 228 to 240 per share with a face value of Rs 5 per equity share. It will be open for public subscription from September 9th onwards, with bids to be made for a minimum lot of 62 shares.