Sansera Engineering Ltd IPO

Competitive Strengths:

Here, are some of the Competitive Strengths of the company.

A leading supplier of complex and high-quality precision engineered components that is gaining market share across automotive and non-automotive sectors:

Sansera Engineering is one of the top 10 global suppliers of connecting rods in terms of production volume (units) for (i) Light Vehicles with a global market share of 2.3% in CY 2020 compared to a global market share of 0.9% in CY 2015 and (ii) CVs with a global market share of 3.0% in CY 2020 compared to a global market share of 0.9% in CY 2015. Within India, the company is one of the leading manufacturers of (i) connecting rods, crankshafts, rocker arms and gear shifter forks for twowheelers and (ii) connecting rods and rocker arms for passenger vehicles. Specifically, within two-wheelers, Sansera Engineering is the largest supplier of connecting rods, rocker arms and gear shifter forks in India. Within passenger vehicles, the company is the largest supplier of connecting rods and rocker arms in India. As at July 31, 2021, Sansera has been awarded business from 35 customers in the automotive sector and from 21 customers in the non-automotive sector across its product portfolio, where the start of production is either during or after Fiscal 2021.

Well diversified business model:

Sansera Engineering has a diversified and increasing customer base. Within India, their customers include nine of the top 10 two-wheeler OEMs and the leading passenger vehicle OEM based on production volume for Fiscal 2021. Globally, their customers include six out of top 10 global Light Vehicle OEMs and three of the top 10 global MHCV OEMs based on production volumes for CY 2020. The company derives their revenue from multiple segments within the automotive sector, including the two-wheeler, passenger vehicle and commercial vehicle verticals. Within the non-automotive sector, Sansera Engineering manufactures and supplies a range of precision components for the aerospace, off-road, agriculture and other segments, including engineering and capital goods. The company has focused on increasing their export revenues with a view to reduce dependence on the Indian market. The revenues from sale of products are geographically diversified with Europe, USA and other foreign countries accounting for 35.02% of the revenue from sale of products in FY21.

Long-standing relationships with well-known Indian and global OEM customers:

Within India, the company’s customers include nine of the top 10 two-wheeler OEMs and the leading passenger vehicle OEM based on production volume for Fiscal 2021. Globally, their customers include six out of top 10 global Light Vehicle OEMs and three of the top 10 global MHCV OEMs based on production volumes for CY 2020. Sansera Engineering has long-standing relationships with several well-known Indian and global OEMs. Specifically, (i) in the two-wheeler vertical the company has relationships of 25 fiscal years with Bajaj, over 20 years with Yamaha and over 20 years with HMSI, the third, fifth and second largest two-wheeler Indian OEMs in terms of domestic production volume for Fiscal 2021, respectively and (ii) in the passenger vehicle vertical the company has relationships of over 30 years with Maruti Suzuki, the leading Indian passenger vehicle OEM in terms of domestic production volume for Fiscal 2021 (source: the CRISIL Report), over 10 years with Stellantis N.V. (formerly Fiat Chrysler Automobiles), a leading European passenger vehicle OEM, and over 10 years with one of the leading North American passenger vehicle OEMs

Key Risks:
•    The COVID-19 pandemic has had, and the company expects it to continue to have, a material adverse effect on their business.

•    Sansera Engineering does not have firm commitment of long-term supply agreements with their customers. If the customers choose not to source their requirements from them, there may be a material adverse effect on their business. 

•    Pricing pressure from their customers may adversely affect their gross margin, profitability and ability to increase their prices, which may in turn have a material adverse effect on their results of operations.

_{*For complete list of risk factors referring to the Red Herring Prospectus.}