Carraro India Files for Rs 1,812 Crore IPO

Carraro India Limited, a Pune-based manufacturer of transmission systems for off-highway vehicles, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) valued at Rs 1,812 crore.

The IPO consists of a complete offer for sale (OFS) by Carraro International S.E., with shares having a face value of ₹10 each. The offer will follow a book-building process, allocating up to 50% for qualified institutional buyers, at least 15% for non-institutional investors, and a minimum of 35% for retail individual investors.

Established in 1997, Carraro India is a subsidiary of Carraro S.p.A. The company began manufacturing transmission systems in 1999 and axles in 2000. Initially operating with IP rights licensed from other Carraro Group entities, it now specializes in complex engineering products and solutions for original equipment manufacturer (OEM) customers. Carraro India functions as an independent tier 1 provider, focusing on axles and transmission systems for agricultural tractors and construction vehicles.

The company’s Board of Directors includes Ettore Francesco Sequi as chairman and independent director, and Tomaso Carraro as director and vice-chairman. Tomaso Carraro has been with the Carraro Group since 1992 and has played a crucial role in shaping the company’s business and strategic market position. Other key board members include Balaji Gopalan as Managing Director, Davide Grossi as Chief Financial Officer, and Sudhendra Mannikar as Chief Operating Officer.

The Carraro Group has established itself as a leading independent tier 1 supplier of transmission systems and a key provider of axles in the agricultural tractor and construction vehicle industries in India. It has achieved market leadership in transmission systems for tractors up to 150HP with four-wheel drive capabilities.

Carraro India’s design capabilities were previously provided through Carraro Technologies India Private Limited (CTIPL) and the Carraro Group. However, with the transfer of IP rights on October 1, 2023, and the acquisition of CTIPL in June 2024, the company now offers integrated design services to its customers, strengthening its competitive position in India. The company has grown its domestic market presence significantly, with approximately 64.82% of its revenues coming from domestic sales in Fiscal 2024, compared to almost all products being exported in Fiscal 1997.

The company’s product range includes axles and transmission systems for various agricultural tractors and construction vehicles, such as backhoe loaders, soil compactors, cranes, self-loading concrete mixers, and small motor graders. These components are crucial for its customers’ final products, including off-highway vehicles, gears, shafts, and ring gears for industrial and automotive vehicles.

According to the Markets and Markets Report cited in the DRHP, the Carraro Group has been a pioneer in the agricultural tractor and construction vehicle component market, supported by its dedicated R&D team. With 27 years of presence in India, Carraro India has developed an extensive network of local and international customers and suppliers. As of 2023, the company holds a leading position in the non-captive segment of the agriculture tractors transmission market and a 60-65% share of the non-captive construction vehicle transmission market.

Carraro India operates two manufacturing plants in Pune, one for drivelines and another for gears. These facilities are equipped with advanced technologies for various manufacturing processes. The capacity utilization of the Driveline manufacturing plant for fiscal 2024 was 81.07%, while the Gears manufacturing plant operated at 89.94% capacity.

As of March 31, 2024, the company supplied to 38 manufacturers in India and six internationally. Its customer base includes major domestic and international OEMs, with long-term relationships spanning at least 15 years. Key clients in the agricultural tractor sector include CNH, TAFE, Mahindra and Mahindra, John Deere India Private Limited, Escorts Kubota, Action Construction Limited, and International Tractors Limited. In the construction vehicle sector, the company serves CNH, Bull Machines, Liugong, Manitou Equipment, Doosan, Escorts Kubota, Mahindra and Mahindra, and Action Construction Limited.

Carraro India has developed a network of 189 suppliers across 8 states in India and 68 international suppliers. The company’s top 10 suppliers have been engaged for an average of 15 years.

The company’s financial performance shows growth, with revenue from operations increasing by 4.44% from ₹1,695.12 crore in fiscal 2023 to ₹1,770.45 crore in fiscal 2024. Profit after tax grew by 29.44% from ₹46.80 crore in fiscal 2023 to ₹60.58 crore in fiscal 2024.

Axis Capital Limited, BNP Paribas, and Nuvama Wealth Management Limited are serving as the book-running lead managers for the IPO, while Link Intime India Private Limited is the registrar. The company plans to list its equity shares on both BSE and NSE.

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