Piramal Finance, part of the $ 1.3 billion Piramal Enterprises, has made its first set of investments in the growing auto component industry. It has invested Rs. 275 crore in Pune based RSB Group and Rs. 290 crore in Coimbatore based Indoshell Mould Limited. The investments were made through the Corporate Finance Group (CFG), erstwhile Structured Finance Group, of Piramal Finance Limited. The finance arm is likely to invest more in the auto component sector as it scales up the business.
The CFG has diversified over time both in terms of sector and offerings. CFG is now sector agnostic and offers capital across the risk curve including senior debt, acquisition finance, promoter finance, private equity exits alongside its previous focus on mezzanine investments. It started with focus on infrastructure which includes roads and renewables but over the last two years has funded corporates across cement, entertainment, security management, packaging, etc. CFG typically targets borrowers who face constraints from traditional channels owing to the current stress in the banking system.
RSB manufactures auto engineering products such as propeller shafts, gears, axles & machined products for engine components and construction equipment aggregates. Company has strong domestic presence with 11 manufacturing facilities spread across major auto clusters and caters to all the major OEMs in the commercial vehicles, passenger cars, construction and farm equipment.
Indo Shell is a two-wheeler focussed precision cast supplier and has a well-diversified customer base. The company has been consistent in producing high quality engine cylinder blocks at competitive costs and consequently enjoys a healthy order book from marque two-wheeler OEMs.
“The auto component space has been on our radar as a focus area for a while now. The industry has grown at a 15% CAGR over the last decade, which is significantly higher than the OEMs. Both RSB and Indoshell have long standing relationships with major OEMs and command higher wallet share of their respective customer set," says Khushru Jijina, Managing Director, Piramal Finance Limited.
RK Behera, Chairman and Managing Director, RSB Group says, “We are pleased to have partnered with an organisation of such repute as being a funder of choice in the market today. This investment has provided us with a long-term solution to our capital requirements.”
Balaji Jagadeesan, Managing Director, Indo Shell Mould says, “This tranche of funding from the Piramal Group has helped us solve a cash flow mismatch situation and further enables us to meet the incremental demand from two wheeler OEMs. In addition, we are now well placed to cater to our export clients in the commercial vehicle segment through our new state-of-the-art export oriented facility situated near Coimbatore.”