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Salient features of the IPO:

• Kross Ltd. (Kross), a trailer axle and other auto components manufacturer is coming up with an IPO to raise Rs. 500cr, which opens on 9 th Sept. and closes on 11th Sept. 2024. The price band is Rs. 228 - 240 per share.

• This public issue is a combination of fresh (Rs. 250cr) and OFS (Rs. 250cr). The company will not receive any proceeds from the OFS portion. From the fresh issue net proceeds, the company will be utilizing Rs. 90cr for the pre-payment/re-payment of certain borrowings; Rs. 70cr will be used for the purchasing of machinery & equipment and another Rs. 30cr will be used for funding the working capital requirement of the company. Residual proceeds will be used for general corporate purposes.

• Few of the promoter & promoter group (P&PG) entities are participating in the OFS and partially offloading 1.042 - 1,096cr equity shares. PostIPO, P&PG will have 67.7% stake in the company, while public shareholding will be 32.3%.

Key competitive strengths:

• Long standing relationship with large OEMs and their tier-1 suppliers, domestic dealers and fabricators

• One of the prominent domestic manufacturers of trailer axles & suspension assemblies

• Diversified product portfolio with a focus on continuous value addition

• Integrated manufacturing operations coupled with in-house product & process design capabilities which offer scale, flexibility and comprehensive solutions

• Track record of sustained growth & robust financial performance in the last three financial years

• Experienced promoters supported by a management and execution team with proven track record

Risk and concerns:

• General slowdown in the global economic activities

• Customer concentration risk

• End-user industry risk

• Product concentration risk

• Manufacturing facility geographical concentration

• Competition

Below are the key highlights of the company:

• Kross, incorporated on May 9, 1991, is a diversified player specializing in the manufacturing and supply of trailer axles, suspension assemblies, and a variety of forged and precision-machined, high-performance safetycritical parts. These products serve the medium and heavy commercial vehicle (M&HCV) and farm equipment sectors. According to the RHP, Kross is recognized as a key manufacturer of trailer axles and suspension assemblies in India, and it has rapidly grown to become a major player in the organized trailer axle manufacturing industry. The company is one of the few in India with the capability to produce these products entirely inhouse.

• The company is backward integrated with in-house design, process engineering, forging, casting, and machining capabilities. This gives it greater control over production, delivery schedules, pricing, and quality. As a result, it relies less on third parties, simplifies its operations, and enhances efficiency. Additionally, this integration allows the company to oversee the entire manufacturing process, offering customers faster deliveries and more competitive pricing. Kross has also expanded its reach by forward integrated with a network of sales and service centers across key states in India to support its trailer axles and suspension assemblies.

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