Tata Autocomp to Raise INR 1,100 crores Via IPO

Tata Autocomp Systems, an auto parts manufacturer intends to raise about INR 1,100 crore or $245mn by an IPO within the coming two to three weeks. The company is an arm of the Tata Group. The company’s chief executive and managing director, R.S. Thakur said that their offer will comprise of fresh shares to help them raise INR 750 crores that will be used to expand their capacity and decrease their debt.

The existing shareholders Tata Sons, Tata Motors, Tata Investment Corp., Tata Capital and Tata Industries will sell 35.6mn shares altogether. Tata Group has a 17% stake in Tata Autocomp. Thakur said that they have received the final observations from SEBI. It is important to get the IPO underway the sooner they can, as wasting more time will only lead to uncertainty.

Tata Autocomp is relying on 35 to 40% proceeds gathered from the IPO to pay off their debt. Their current debt stands an equity ratio of 2:2. Funds from the proceeds will also go towards expanding the production capacity of their 47 manufacturing facilities. For the fiscal year 2011, the company had set aside INR 300 crores to be used for expansion of production capacity.

Thakur said that the Indian auto industry will keep on growing, however with not the same speed as China’s. Their focus remains to capture all of the growth going on in the market. They also believe they have their hands full at the rate at which the Indian auto industry in growing.

Tata Autocomp counts Ford Motors, GM, Fiat, Ashok Leyland, Eicher and VW as their clients. They are reportedly having discussions with India’s leading car manufacturer, Maruti Suzuki regarding business opportunities. The company has six joint ventures globally of which five are equal partnerships. The company’s consolidated revenue that includes only its share of JVs is $639mn reported in the fiscal year 2010-2011 is estimated to increase to $1.5bn.

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