Carraro India IPO

The company claims to have advanced manufacturing facilities at its two manufacturing plants in Pune, Maharashtra. Among these, the driveline manufacturing plant is equipped for machining, assembly, and testing of axles and transmission systems. The gear manufacturing plant claims to house advanced gear machining and heat treatment technologies such as carburising, induction hardening, and nitriding.

As of September 30, 2024, the gear manufacturing plant holds the IATF 16949:2016 certification for quality management and is also ISO 9001:2015 certified for quality management systems.

The drive line manufacturing plant is ISO 9001:2015 certified for quality management systems and ISO 14001:2015 certified for environmental management systems.

As of September 30, 2024, Carraro India supplies its products to 38 manufacturers across India.

In addition to serving Indian manufacturers, Carraro India supplies products to international manufacturers. Some of these exports are facilitated through Carraro Drive Tech Italia S.p.A., a leading entity in the Carraro Group's driveline business.

The company has seen a consistent increase in revenue from operations and profit after tax (PAT). Revenue from operations increased from Rs 1,497.54 crore in FY22 to Rs 1,713.14 crore in FY23 to Rs 1,788.96 crore in FY24, while PAT increased from Rs 22.43 crore in FY22 to Rs 48.46 crore in FY23 to Rs 62.56 crore in FY24.

The company derives a major portion of its revenue from its top 10 customers. The top 10 customers of the company contributed Rs 803.73 crore (87.88%%) for the six months ended 30, September 2024 and Rs 1,527.66 crore (85.39%), Rs 1,488.79 crore (86.90%), Rs 1,320.93 crore (88.21%) to the total revenue from operations in FY24, FY23, and FY22, respectively. Any failure to retain these key customers, expand the customer base, or a loss of business from these clients can adversely affect the company’s business and finances.

Carraro India relies on the Carraro Group for various operational aspects, including the use of the Carraro brand, customer sourcing, procurement, R&D, and general support. The Carraro Group has been the company's largest customer, contributing Rs 304.34 crore (33.27%) for the six months ended 30, September 2024 and Rs 606.71 crore (33.91%), Rs 562.94 crore (32.86%) and Rs 464.12 crore (30.99%) in FY24, FY23 and FY22, respectively, to the revenue from operations. Any disruption in this relationship could adversely impact the company’s operations and business performance.

The manufacturing operations of Carraro India are concentrated in Pune, Maharashtra. Any adverse developments in Maharashtra, such as labour disputes, natural disasters, or regulatory changes, could hit production, negatively impacting the company’s financial performance.

Carraro India’s business is dependent on the performance of the tractor and construction vehicles markets. The agricultural sector contributed Rs 425.03 crore (47.08%) for the six months ended September 30, 2024, and Rs 793.39 crore (45.05%), Rs 832.31 crore (49.37%), and Rs 745.90 crore (50.59%) in FY24, FY23, and FY22, respectively, to revenue from operations. The construction vehicles segment contributed Rs 357.60 crore (39.61%) for the six months ended September 30, 2024, and Rs 727.18 crore (41.29%), Rs 647.74 crore (38.43%), and Rs 532.57 crore (36.12%) in FY24, FY23, and FY22, respectively, to revenue from operations. Any adverse changes in these markets could negatively affect the company’s business operations.

The company relies heavily on its global base of OEM customers. Exports contributed Rs 315.07 crore (34.60%) for the six months ended September 30, 2024, and Rs 638.40 crore (35.87%), Rs 650.64 crore (38.19%), and Rs 548.36 crore (36.80%) in FY24, FY23, and FY22, respectively, to the revenue from operations. Any inability to maintain the stability of its existing OEM customer relationships or attract new customers could adversely impact its financial condition and operational results.

The company has contingent liabilities as of September 30, 2024, amounting to Rs 231.07 crore. If these liabilities materialise, it could pose a risk to the company’s financial stability.

The company, its subsidiary, and promoters are involved in some legal proceedings. Any adverse judgments in any of these cases can be detrimental to the company’s business prospects.

As of October 31, 2024, the total borrowings amounted to Rs 209.19 crore. Any failure to service or repay these loans on time could adversely impact the company’s operations, liquidity, and overall financial position.