July 22, 2024

DIVGI TORQTRANSFER SYSTEMS LIMITED

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Divgi TorqTransfer Systems Limited (“The Company”), is amongst the very few suppliers in India who have the capability to develop and provide system level transfer case, torque coupler and Dual-Clutch Transmission (DCT) solutions. It is one of the leading players supplying transfer case systems to automotive Original Equipment Manufacturer (OEM) in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India. It is also the only player manufacturing and exporting transfer cases to global OEMs from India, and the only manufacturer of torque couplers in India. It also has the capability to develop and provide transmission systems for electric vehicles and is in the process of designing and developing prototypes of transmission systems for Electric Vehicles (EVs) pursuant to receipt of a business award for this purpose. It is one of the few companies who serve both as systems level solution provider as well as component kit supplier to global OEMs and Tier I transmission systems suppliers

The Company proposes to open its initial public offering of equity shares of face value ₹ 5 each (“Equity Shares”) on Wednesday, March 01, 2023. The Initial Public Offerings comprises of fresh issue of equity shares aggregating up to ₹ 180 crore (“Fresh Issue”) and offer for sale of up to 39,34,243 equity shares (the “Offer for Sale”). The Anchor Investor Bidding Date shall be Tuesday, February 28, 2023.  The Offer will close on Friday, March 03, 2023.

The Price Band of the Offer has been fixed at ₹ 560 to ₹ 590 per equity share. Bids can be made for a minimum of 25 equity shares and in multiples of 25 equity shares thereafter.

The Company proposes to utilize the net proceeds of the fresh Issue towards funding (i) Funding capital expenditure requirements for the purchase of equipment’s /machineries of its manufacturing facilities (“Capital Expenditure”) and (ii) General corporate purposes. (The “Objects of the Issue”).

The offer for sale comprises of up to 22,50,000 equity shares of Oman India Joint Investment Fund II, up to 14,41,441 equity shares of NRJN Family Trust (represented by its corporate trustee, Entrust Family Office Legal and Trusteeship Services Private Limited) (the “Investor Selling Shareholders”) and up to 2,42,802 equity shares by certain non-promoter shareholders of the Company (the “Other Non-Promoter Selling Shareholders”).

The Equity Shares are proposed to be listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”). For the purposes of the Offer, the BSE is the Designated Stock Exchange.

Inga Ventures Private Limited and Equirus Capital Private Limited are the Book Running Lead Managers to the Issue

The Company manufacture and supply a variety of products under the broad categories of (i) torque transfer systems (which includes four-wheel -drive (“4WD”) and all-wheel-drive (“AWD”) products); (ii) synchronizer systems for manual transmissions and DCT; and (iii) components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs. It also developed (i) transmission systems for EVs; (ii) DCT systems; and (iii) rear wheel drive manual transmissions.

The Company has strong and well established relationships with several marquee domestic and global OEMs in the automobile sector such as Tata Motors, Mahindra & Mahindra and with global suppliers such as BorgWarner for over two decades. It derives a significant portion of its revenue from top five customers namely, Mahindra & Mahindra, Tata Motors, Toyota Kirloskar Auto Parts, BorgWarner and a Russian automobile manufacturer. For the six months ended September 30, 2022 and Fiscal 2022, Fiscal 2021 and Fiscal 2020, income from sale of goods to its top five customers accounting for 92.66%, 91.28% , 92.86% and 86.94% of its total income from sale of goods.

In addition to product supply, company has entered into a product development agreement (“PDA”) and a technology transfer agreement (“TTA”) with a German automotive company. Pursuant to the PDA and TTA, the Company is co-developing critical components and systems for DCT applications with exclusive rights for India and non-exclusive rights for markets outside India. The licensing arrangement pursuant to the TTA will continue for a period of 13 years from the date of signing till 2033. Company has also entered into a license agreement with BorgWarner on October 4, 2004, subsequently renewed on March 1, 2017, valid for a period of seven years from the date of renewal of the agreement. It has also entered into an exclusive distribution agreement with a Japanese automotive supply chain company in relation to sourcing of products and components made by the company.