Piramal Finance enters auto space, invests Rs 565 cr in two component cos

With these two deals, Piramal Group is now sector-agnostic, and offers capital across risk curve

Piramal Enterprises Limited (PEL) has expanded its sector portfolio by investing in two auto-component companies. PEL, through its subsidiary Piramal Finance Limited, has committed around Rs 565 crore across two transactions in two autocomponents makers.

The company has committed Rs 275 crore to the RSB Group and Rs 290 crore to Indoshell Mould Limited. The investments were made through the Corporate Finance Group (CFG), formerly known as Structured Finance Group, of Piramal Finance Limited.

The CFG has diversified over time both in terms of sector and offerings. CFG is now sector-agnostic and offers capital across the risk curve including senior debt, acquisition finance, promoter finance, private equity exits alongside its previous focus on mezzanine investments.

It started with focus on infrastructure which includes roads and renewables but over the last two years has funded corporates across cement, entertainment, security management, packaging, and other segments. CFG typically targets borrowers who face constraints from traditional channels owing to the current stress in the banking system.

Khushru Jijina, Managing Director, Piramal Finance Limited, said that the auto component space has been on the radar as a focus area for a while now.

The industry has grown at a 15 per cent CAGR over the last decade, which is significantly higher than the OEMs themselves. Both RSB and Indoshell have long standing relationships with major OEMs and command higher wallet share of their respective customer set.

"We look forward to more such transactions as we further scale up our investment focus towards this sector," said Jijina.

R K Behera, Chairman and Managing Director, RSB Group said that this investment has provided the company with a long-term solution to the capital requirements. The Rs 1,200 crore company has presence across the country with 11 manufacturing facilities.

RSB manufactures auto-engineering products including propeller shafts, gears, axles and machined products for engine components and construction equipment aggregates. The company has domestic presence with 11 manufacturing facilities spread across major auto clusters and caters to all the major OEMs in the commercial vehicles, passenger cars, construction and farm equipment.

Balaji Jagadeesan, Managing Director, Indo Shell Mould said that this tranche of funding from the Piramal Group has helped us solve a cash flow mismatch situation and further enables us to meet the incremental demand from two wheeler OEMs. In addition, the company is well placed to cater to the export clients in the commercial vehicle segment through the new export oriented facility situated near Coimbatore.

Indo Shell is a two-wheeler focussed precision cast supplier, with diversified customer base and has a healthy order book from marque two-wheeler OEMs.