Deal Description

We are looking to raise working capital for a financially stressed company from Karnataka - 

Summary:

• GM, incorporated in 1991 is a registered MSME. It is involved in the manufacturing of CNC Machines that are in turn used to manufacture precision parts required for a number of sectors (viz. automotive, defence, aerospace, electronics, etc. ).
• GM had been showing steady growth and strong market presence due to its superior in-house IP and timely technological partnerships with Italian and Czech companies. The peak revenue for the company stood at Rs. 41.8cr in FY 2016-17.
• Given this growth there was a need to increase capacity to cater to the increasing orders. Between the period of 2017-19, GM invested around Rs. 17cr in increasing capacity and in-house R&D – this increase capacity by 347% to potentially achieve peak revenue of 432 crores.
• The last three years has not been a good period for the business due to the auto sector slump followed by the lockdowns affecting the capital good sector across the country.
• Having said that, the company still has a strong good-will in the market and without any marketing and sales effort, they currently have active ‘Purchase Orders’ worth Rs. 15cr. The domestic sales pipeline is of Rs. 25cr+ but due to lack of working capital, the company is unable to take these orders.
• In addition to the above, they have a confirmation from a buyer in US that requires around 150 machines annually with an approximate value of $10mn per year. This is an annual requirement as the capability to build these machines as per the required quality standards lies only with GM. The buyers used to procure the same machines from Biglia (Italy), which has now stopped production of these machines. Given the long standing technical partnership, GM is the only source to procure these machines. 
• Given the strong interest and the active orders in hand, the company is seeking infusion of capital of min of Rs. 5cr for monthly rolling and delivering the orders and be in a position to take additional work. Long term funding requirements are of minimum Rs. 55cr-60cr We are open to discuss possible long-term partnership offers from interested investors/businesses.

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