Craftsman Automation Ltd, a parts maker for the automotive and industrial sectors, is proposing a capex of about ₹500 crore in FY25. The bulk of the investments is likely to be spent on completing two of its greenfield factories in Rajasthan and Tamil Nadu.
The Coimbatore-headquartered company is in a significant capex phase to capitalize on long-term growth prospects. In the previous fiscal year, it invested about ₹580 crore in capex.
The ₹4,452 crore (consolidated revenue) company is setting up a factory at Bhiwadi in Rajasthan for its aluminium casting business, targeting growth opportunities from OEMs in the Northern part of India. It is learnt that the Bhiwadi unit has already secured orders for half its capacity, with trial production expected to commence this fiscal year and ramp up in the next.
“Our new plant in Bhiwadi, which is under construction, will enable us to scale up and cater to customers in the northern region. With a growing focus on lightweighting in the automotive segment, Craftsman has the facilities and technology to capture the demand for structural and other vehicle parts in aluminium, Srinivasan Ravi, Chairman & Managing Director said in the company’s latest annual report.
Additionally, it is establishing a new factory at its existing production site at Kothavadi near Coimbatore to cater to industrial and powertrain business. The management has given a revenue guidance of $100 million to be achieved over 4-5 years from this business.
“On the back of its strong engineering capabilities, Craftsman Automation has emerged as the largest independent machining player, one of the top three players in storage solutions, and a credible competitor in the aluminum die-casting business. The company now has a well-diversified portfolio, bolstered by the acquisition of DR Axion India,” says a report by Motilal Oswal Financial Services.
In FY24, the powertrain business contributed 35 per cent, aluminium die castings 48 per cent, and industrials/storage solutions 17 per cent of revenue.
As the company needs funds for future growth and to support further expansion, it will seek shareholders’ nod to raise funds up to ₹1,200 crore via debt or equity in FY25. The Board has already approved this enabling resolution.
“We have been a little leveraged now because of the huge expansion and also the acquisition which was done a year back. We have decided to de-leverage by reducing the amount of debt. So, we are raising funds via the public. But, the timing of that is still uncertain. So, it is only the enabling resolution as of now, Srinivasan Ravi, Chairman and Managing Director of Craftsman Automation said during the company’s Q4FY24 earnings call.