Kross To Invest Rs 30 Crore From IPO Proceeds On Extrusion Plant
The firm expects the move to be a game changer in the the trailer axle and suspension segment.
Kross Ltd., a trailer axle and suspension manufacturing and supply company that listed on the bourses on Monday, said that it will allocate Rs 30 crore of the raised funds for an extrusion plant.
"We want to bring in what the world uses for trailer axles, which is an extruded beam instead of the fabricated beam, which is being done currently in India by all the other players," said Sudhir Rai, chairman and managing director of Kross.
Of the Rs 70 crore capex, Rs 30 crore will be spent on the plant and the rest of the amount will be used for export customers, increasing forging capacity and adding a new foundry line, Rai said.
The reason for this move was that extrusion beams were reported as stronger, more cost-effective and lighter in weight in comparison to their fabricated counterparts.
The firm said that extrusion beams were already checked and tested by the Indian trailer industry, qualifying them as suitable for manufacture by the company.
"Luckily, we'll be the first people to have it with us. We feel it's going to be a game changer in the trailer axle and suspension segment," Rai said.
The company chairman expects better growth going forward due to the trailer and suspension segment growing fast in the medium and heavy commercial vehicles space.
He also credited the shift from rigid vehicles to prime movers by the original equipment manufacturing sector as another factor into his expectations for better growth.
Shares of Kross Ltd. debuted flat on the BSE and on the National Stock Exchange on Monday at Rs 240 per share—the same as the issue price. The company was looking to mop up Rs 500 crore through its maiden share sale. The IPO was subscribed 16.81 times on the third and final day.
The funds will be used largely to repay borrowings and fund future capital expenditures. It would repay approximately Rs 90 crore of debt while funding Capex with Rs 70 crore earned from the IPO. The company plans to undertake capex to fund the purchase of machinery and equipment.
It will also set aside roughly Rs 30 crore to fund working capital.
Shares of Kross Ltd. closed 8.13% higher at Rs 259.50 apiece on the BSE, compared to a 0.12% advance in the BSE Sensex.
