Rolex Rings Ltd. will launch its initial public offering on July 28 as an investor plans to sell part of its stake, and the forging and bearing company seeks to raise working capital till it comes out of debt restructuring.
Objective
Rolex Rings plans to use Rs 45 crore from the fresh issue to augment its long-term working capital requirement.
Business
Rolex Rings is one of the top five forging companies in India, according to ICRA Ltd. It is a manufacturer and global supplier of hot-rolled forged and machined bearing rings, and automotive components.
The company has three manufacturing facilities in Gujarat.
Nearly 53.7% of the revenue comes from bearing rings and 38.5% from automotive components.
Top 10 customers account for 72.6% of the revenue.
Exports account for 56.10% of the revenue.
The company supplies to over 20 companies across 17 countries.
Corporate Debt Restructuring
The company defaulted on repayments in 2013 and later entered into corporate debt restructuring with public sector banks. As part of the scheme, the promoters were asked to infuse capital.
They invested in non-convertible redeemable preference shares and Rs 33.57 crore worth of CDR debt remained outstanding as of March. According to the IPO filing, Rolex Rings plans to exit CDR by repaying the remaining amount by March.
The terms of the preference shares were changed to allow redemption upon listing. These will be repaid using internal accruals, Hiren Doshi, chief financial officer at Rolex Rings, told BloombergQuint in an interaction.
The company has delayed repayment of interest and working capital in the last few years. While Rolex Rings admitted to delays of a few days, it said the bearing maker was unable to expand its working capital facility as some of its lenders were under Prompt Corrective Action initiated by the Reserve Bank of India.
Financials
The company has seen its revenue slip since fiscal 2018-19. It attributed it to a slowdown in automobile industry and subsequent lockdowns due to Covid-19.
The company's debt, however, fell in the last three years from Rs 385.10 crore to Rs 250 crore.
Peer Comparison
The company competes with Bharat Forge Ltd., Ramkrishna Forgings Ltd. and MM Forgings Ltd.
Watch | IPO Adda with Rolex Rings' Chairman Manesh Dayashankar Madeka:
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