Gala Precision To Set Up Chennai Plant With Rs 37 Crore From IPO Proceeds
The precision components manufacturer's IPO will remain open for subscription from Sept. 2 to Sept. 4.
Gala Precision Engineering's Rs 168 crore initial public offering will open for subscription on Sept. 2 and close for bidding on Sept. 4.
The price band of the book-built issue has been fixed between Rs 503 and Rs 529 per share. The listing date for the mainboard issue has been scheduled for Sept. 9. Shares of Gala Precision Engineering Ltd. will be listed on the NSE and BSE.
The leading precision component manufacturer plans to use part of the proceeds from the public offer to establish a manufacturing plant in Chennai, according to Balkishan Jalan, executive director of Gala Precision Engineering.
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“We will be getting Rs 135 crore against the fresh equity. Out of that, Rs 37 crore will be utilised for the Chennai project, Rs 11 crore will be utilised for the Wada capex, Rs 46 crore for repayment of debt, and we will keep the rest of the fund for corporate purposes,” Jalan told NDTV Profit, elaborating on the fund utilisation breakup ahead of the IPO launch.
The company will set up a new facility at Vallam-Vadagal in Sriperumbudur near Chennai for manufacturing high-tensile fasteners and hex bolts, according to its draft red herring prospectus.
Gala Precision Engineering Chairman and Managing Director Kirit Vishanji Gala added that the IPO will also help in volume expansion at the Chennai plant. “We are putting up about Rs 48–50 crore in Chennai to create a capacity of Rs 110–120 crore,” he said.
“Last year, in FY24, we did Rs 200 crore from our plants’ volume capacity in Wada near Thane. It is quite close to Mumbai. The third plant is coming up near Chennai. In terms of capacity, we almost have Rs 250 crore in terms of volume at Wada,” Gala added.
In FY24, Gala Precision Engineering reported revenue of Rs 202.54 crore, while the Ebitda margins improved from 16.5% to 19% on a year-on-year basis. Jalan stressed that the company will sustain these margins in the future. “Over a period, we added a lot of products and have done cost reduction projects, which contributed to our Ebitda margin of 20%. At this point, we want to say that we will be maintaining this even at high growth in the future," he said.
The company has a decent export market too, and in FY24, exports contributed to 37.5% of the company’s total revenue. Europe is one of the biggest export markets of Gala Precision Engineering. According to the company's CMD, Kirit Gala, the company has maintained its edge in terms of service and quality in the region.
“Going forward, we expect to maintain the 40% export revenue. We are particularly focussing on the US market, while Europe will also remain major markets,” he said.
