Shriram Pistons & Rings Ltd

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Shriram Pistons & Rings Ltd (SPRL) has an exceptional lineage of Shriram Group, one of the most
reputed Industrial houses. Shriram Pistons & Rings Ltd is primarily engaged in the manufacturing of pistons, piston pins, piston rings and engine valves for various automotive companies in the domestic and export markets.

BS-6 Business
The Co. had acquired key businesses for BS-6 models in FY20 requiring the latest technology and stringent quality requirements. This also resulted in higher market share with the key OEMs in India. During FY21, the Co. had a smooth ramp up of products for BS-6 models, to the satisfaction of all its OEMs.
Marquee Clientele
The Co.’s customer base includes most of the OEMs in India like Maruti, Mahindra, Honda, Ford, Nissan, Tata, Bajaj, Hero, TVS, Yamaha, Ashok Leyland, Daimler, VE Commercial, Swaraj, and various others. [5] It also caters to global OEMs, namely Jaguar, Land Rover, JCB, BMW Motorrad, Volkswagen, Rotax, ZF Wabco, Yanmar, etc

In order to meet the Company’s vision for diversification and growth in areas other than IC Engines, the Company has been actively
working on identifying suitable opportunities to diversify its existing product portfolio

Key Business developments:
i. Acquisition of 51% stake in EMF Innovations Private Limited (“EMFI”)
The Company through its wholly owned subsidiary SPR Engenious Ltd. acquired 51% stake in the share capital (on a fully ndiluted basis) of EMFI (CIN: U29309TZ2016PTC027538), for a total consideration of INR 780.03 Mn.
EMFI is a Singapore backed electric motor design and manufacturing Company. EMFI is a young Technology company co-founded by engineering entrepreneurs with substantial R&D and operations in India and Singapore thereby providing localized cost effective e-mobility solutions to customers in India and abroad. EMFI has been leveraging on its strong power electronics & motors research base and extensive semi-automated manufacturing eco-system to deliver reliable EV Motors and Controllers for green mobility solutions and various other applications.
ii. Definitive Agreement to acquire 75% stake in Takahata Precision India Private Limited (TPIPL)
The Company through its wholly owned subsidiary SPR Engenious Ltd. has entered into definitive agreement to acquire 75% stake in the share capital (on a fully diluted basis) of TPIPL (CIN: U29220RJ2010FTC046888), at an Enterprise Value of INR 2,220 Mn. with adjustments for debt, debt like items and working capital to be calculated as on closing date subject to satisfactory completion of all conditions precedent.
TPIPL’s existing portfolio of precision moulded parts, precision metal moulds parts, assembled parts having a variety of functional products for the automotive and other Industrial applications, fits into the Company’s strategy of inorganic growth alongside de-risking its current business model.

Transition to EV: SPRL is exposed to the risks related to changes in regulations within the automotive industry, especially with regards to the transition to EVs, including the potential for acquisitions and/or higher research and development spending. The company derives a sizeable proportion of its revenue from the two-wheeler segment, which is among the first auto segments to witness higher electrification. Hence, the agency believes that an increase in the penetration of EVs could affect the company’s credit profile. To mitigate this risk, SPRL is trying to foray into EV components and is looking at inorganic route for the same. Furthermore, Ind-Ra expects the shift to EVs across auto segments to be gradual, and the risk is likely to play out only over the medium-to-long term. This remains a key rating monitorable.