Industrial automation player Marshall Machines said its promoters will sell around 3.4% of the company to raise capital to meet the company’s working capital needs.
The promoters currently hold around 73.4% of the total outstanding shares, which will come down to 70% by the end of the exercise. A 3.4% stake in the company is worth around Rs 2 cr at today’s price.
The company was listed on the NSE’s SME exchange three years ago and moved to the main NSE exchange a month ago.
The factory automation company had raised around Rs 16 cr via its IPO on the NSE SME exchange in late 2018, pricing each of its shares at Rs 42.00.
However, it listed below the IPO price, at Rs 37.45, before ending the first day of trade at Rs 39.30.
Three years later, it debuted on the main exchange at Rs 31.40 per share as of Nov 22, but soon zoomed to Rs 66.20/share as of Dec 1. However, the subsequent market correction hit its valuations, dragging the share price to Rs 40.20 as of today.
With 1.45 cr shares outstanding, the company has a market capitalization of Rs 58.5 cr.
The Punjab-based company had revenue of around Rs 65 cr/year at the time of the IPO, thanks to clients like Havells, Hero, Amtek Auto and Usha from sectors such as auto, appliances, engineering, aerospace, electronics and medical equipment.
The company now says it now faces a sharp increase in demand for its solutions — called CNC or computer numerical control machines. CNC machines are the basic building blocks of automation on the factory floor, and can do a variety of jobs such as cutting and drilling in place of humans, and are controlled by software.
Marshall Machines said it needs extra working capital as its order book has bloated to Rs 51 cr as of September end, from Rs 28 cr a year ago. In addition, it said that it was in advanced stage of bidding for contracts worth Rs 165 cr as of September end this year, up from Rs 47 cr last year.
“The company requires working capital to execute the existing order book and accept new orders,” it said.
Managing Director Gaurav Sarup, who is also one of the promoters of the company along with Pashant Sarup, said the uptick in demand has prompted the company to set a target of Rs 250 cr in revenue “in the next few years”.
“Strong demand for our automated machines has resulted into a healthy order book and robust order bid,” he said.
The funds raised by the promoters by selling the shares will be routed to the company in the form of interest-free loans. In other words, the company will have to pay back the money, but will not have to pay any interest or issue any shares.