IPO-Bound Kross Aims To Cash In On Shift In India's Trucking Industry

A shift of fleet owners from rigid medium and heavy commercial vehicles to the prime movers segment will lead to the next leg of growth for Kross Ltd. as it plans to raise capital to invest in technological upgrades, top executives said.

The company, which is set to launch its Rs 500 crore initial public offering next week, will use Rs 70 crore from the proceeds to acquire new equipment for better technologies to be deployed in trailer axles and suspension, Chairman and MD Sudhir Rai told NDTV Profit on Wednesday. "It will also enhance our capacity in forging and foundry to tap new export customers."

Kross Ltd. caters to MHCV farm equipment segments and has a long-standing relationship with several leading original equipment manufacturers that include Ashok Leyland Ltd. and Tata International Vehicle Applications Pvt.

He said the company entered into the trailer axles and suspension business in 2019 and has seen notable growth. "We want to be a major player in the country for this. There is a big shift from rigid vehicles to prime movers. This change will drive the growth for us."

A prime mover is a heavy motor vehicle designed to tow a semitrailer. It requires more axles than rigid trucks.

Rai expects the government to provide incentives to fleet owners after the scrappage yards are built on the lines of its scrappage policy. The government-funded programme to scrap old and unfit vehicles and replace them with modern and new vehicles was rolled out in 2021.

He also said the company wants to keep its focus on automotive axles and not venture into railways.

"We plan to get into better technology in the axle extrusion, which is better than the current design. We plan to expand exports and have partners in Sweden and Japan," Chief Financial Officer Kunal Rai said.

The company's exports contribute 1% to revenue, but it projects expansion after receiving deals, backed with purchase orders and development tool costs.

The tractor and trailer business has 44% of Kross Ltd.'s total revenue. "We are completely backward integrated with operations such as design, engineering, forging and foundry," the CFO said.

Kross has set a price band of Rs 228 to Rs 240 per share for its initial public offering that will open on Sept. 9 and close on Sept. 11. The company seeks to raise Rs 500 crore from the primary market. The anchor book issue will be open for subscription on Sept. 6.

The Jharkhand-based company's initial share sale is a combination of a fresh issue of equity shares worth Rs 250 crore and an offer for sale of equity shares worth another Rs 250 crore, according to the draft IPO papers filed with the Securities and Exchange Board of India.

Promoters Sudhir Rai and Anita Rai will offload shares worth Rs 168 crore and Rs 82 crore, respectively, through the OFS route.