Rolex Rings Sets IPO Price At Rs 880-900. It Issued Shares To Promoters At Rs 10
Rolex Rings Ltd., a company that recently issued shares to promoters at Rs 10 each, has set a price band of Rs 880-900 apiece for its initial public offering.
The bearings maker will launch its three-day IPO on July 28, aiming to raise Rs 731 crore, according to its red herring prospectus. It comprises a fresh issue worth Rs 56 crore and a Rs 675-crore offer-for-sale by private equity investor Rivendell PE LLC.
Rivendell will hold nearly 12% in the company after the share sale. The company is valued at Rs 2,950 crore at the upper end of the price band. Promoters are not selling stake, and will own 57.6% after the IPO. The rest will be held by the public.
The IPO accounts for 29.8% of the post-issue equity capital.
The offer comes after Rolex Rings issued optionally convertible redeemable preference shares at Rs 10 each through rights issue to promoters in March, according to its IPO disclosures.
The company issued nine OCRPS for every 44 equity shares held by the shareholders. Rivendell did not participate in the rights issue. The OCRPS were converted to equity shares in 1:1 ratio on July 16. The promoters received 7.29% stake in the company for Rs 2.3 crore weeks ahead of the IPO.
In an emailed statement to BloombergQuint, Rolex Rings clarified that the rights issue was offered to all shareholders. It has been disclosed in the offer documents as well, and the implied price-earnings multiple in the price band advertisement considers the dilution on account of shares issued on conversion of the OCRPS, it said.
JN Gupta, founder and managing director, Stakeholders Empowerment Services, told BloombergQuint over the phone to not look at the differential price as one before the IPO and the other as part of the IPO.
"When you are making declaration in the prospectus, all ratios have been calculated based on the diluted capital and are disclosed prominently,” Gupta said. "Although, it may appear on face of it to be unfair, but the valuation of the company is derived based on total number of shares and not based on when the shares were issued."
Rolex Rings is one of India’s top five bearings makers and has a sizeable exposure to the automobile ancillary segment. Nearly 53% of the revenue comes from bearings, while over 30% from the automobile industry. It’s a tier-1 supplier to many automotive companies in India and overseas. Nearly 56% of its revenue comes from export to 17 countries.
The company plans to use Rs 45 crore from the fresh issue to augment its long-term working capital. It has a total debt of Rs 250 crore as of March 2021.
Rolex Rings is currently under corporate debt restructuring and aims to come out of it by March 2022. It will redeem the non-convertible redeemable preference shares issued to the promoters as part of the CDR scheme worth Rs 28.6 crore upon listing and after exiting the restructuring.
“The company has delayed on its payments to lenders in the last few years. The banks weren’t able to enhance the working capital limits as some of its lenders were under prompt corrective action guidelines of the Reserve Bank of India,” Manesh Dayashankar Madeka, chairman and managing director at Rolex Rings, told BloombergQuint in an interview. The defaults were by a few days, he said.
Watch the full interview with the company’s management here: