Divgi TorqTransfer Systems Limited to open its IPO

 

Mumbai: "Divgi TorqTransfer Systems Limited" (“The Company”), is amongst the very few suppliers in India who can develop and provide system-level transfer cases, 'torque couplers' and 'Dual-Clutch Transmission' (DCT) solutions. It is one of the leading players supplying transfer case systems to automotive Original Equipment Manufacturers (OEM) in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India. It is also the only player manufacturing and exporting transfer cases to global OEMs from India, and the only manufacturer of torque couplers in India. It also can develop and provide transmission systems for electric vehicles and is in the process of designing and developing prototypes of transmission systems for Electric Vehicles (EVs) under receipt of a business award for this purpose. It is one of the few companies that serve both as a systems-level solution provider as well as a component kit supplier to global OEMs and Tier I transmission systems suppliers.

The Company proposes to open its initial public offering of equity shares of face value ₹ 5 each (“Equity Shares”) on Wednesday, March 01, 2023. The Initial Public Offerings comprise of fresh issue of equity shares aggregating up to ₹ 180 crores (“Fresh Issue”) and an offer for sale of up to 39,34,243 equity shares (the “Offer for Sale”). The Anchor Investor Bidding Date shall be Tuesday, February 28, 2023. The Offer will close on Friday, March 03, 2023.

The Price Band of the Offer has been fixed at ₹ 560 to ₹ 590 per equity share. Bids can be made for a minimum of 25 equity shares and in multiples of 25 equity shares thereafter.

The Company proposes to utilize the net proceeds of the fresh Issue towards funding (i) Funding capital expenditure requirements for the purchase of equipment/machinery of its manufacturing facilities (“Capital Expenditure”) and (ii) General corporate purposes. (The “Objects of the Issue”).

The offer for sale comprises up to 22,50,000 equity shares of Oman India Joint Investment Fund II, up to 14,41,441 equity shares of NRJN Family Trust (represented by its corporate trustee, Entrust Family Office Legal and Trusteeship Services Private Limited) (the “Investor Selling Shareholders”) and up to 2,42,802 equity shares by certain non-promoter shareholders of the Company (the “Other Non-Promoter Selling Shareholders”).

The Equity Shares are proposed to be listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”). For the Offer, the BSE is the Designated Stock Exchange.

Inga Ventures Private Limited and Equirus Capital Private Limited are the Book Running Lead Managers for the Issue.

The Company manufacture and supply a variety of products under the broad categories of (i) torque transfer systems (which includes four-wheel-drive (“4WD”) and all-wheel-drive (“AWD”) products); (ii) synchronizer systems for manual transmissions and DCT; and (iii) components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs. It also developed (i) transmission systems for EVs; (ii) DCT systems; and (iii) rear-wheel drive manual transmissions.

The Company has strong and well-established relationships with several marquee domestic and global OEMs in the automobile sector such as Tata Motors, Mahindra & Mahindra, and with global suppliers such as BorgWarner for over two decades. It derives a significant portion of its revenue from its top five customers namely, Mahindra & Mahindra, Tata Motors, Toyota Kirloskar Auto Parts, BorgWarner, and a Russian automobile manufacturer. For the six months ended September 30, 2022, and Fiscal 2022, Fiscal 2021, and Fiscal 2020, income from the sale of goods to its top five customers accounted for 92.66%, 91.28%, 92.86%, and 86.94% of its total income from the sale of goods.

In addition to product supply, the company has entered into a product development agreement (“PDA”) and a technology transfer agreement (“TTA”) with a German automotive company. Under the PDA and TTA, the Company is co-developing critical components and systems for DCT applications with exclusive rights for India and non-exclusive rights for markets outside India. The licensing arrangement under the TTA will continue for 13 years from the date of signing till 2033. The company has also entered into a license agreement with BorgWarner on October 4, 2004, subsequently renewed on March 1, 2017, valid for seven years from the date of renewal of the agreement. It has also entered into an exclusive distribution agreement with a Japanese automotive supply chain company about sourcing products and components made by the company.