Hero Motors, an auto components manufacturer led by Pankaj Munjal, has recently withdrawn its Draft Red Herring Prospectus (DRHP) from the Securities and Exchange Board of India (SEBI). Pankaj Munjal is a first cousin of Pawan Munjal, the chairman of Hero MotoCorp, a well-known player in the Indian two-wheeler industry.
In August 2024, Hero Motors submitted documents to SEBI for an Initial Public Offering (IPO) worth ₹900 crore. The planned IPO included a fresh issue of shares worth ₹500 crore, while the remaining ₹400 crore was planned as an offer for sale (OFS) by the company’s promoters. The key promoters involved in the OFS were OP Munjal Holdings, Bhagyoday Investments, and Hero Cycles. OP Munjal Holdings was expected to sell shares worth ₹250 crore, while Bhagyoday Investments and Hero Cycles aimed to offload ₹75 crore each.
The company had specific plans for the funds raised through the IPO. A significant portion of the fresh issue of ₹500 crore was to be used to pay off outstanding debts. In addition, Hero Motors intended to use the proceeds to fund capital expenditures, particularly for acquiring new equipment to boost the production capacity of its Noida manufacturing facility. Part of the funds was also allocated to meet working capital needs and cover general corporate expenses.
Hero Motors had earlier mentioned that it might consider a pre-IPO placement to raise up to ₹100 crore. In case the pre-IPO placement was successful, the amount raised would have been deducted from the portion of the IPO proceeds allocated for general corporate purposes.
The automotive components industry is witnessing significant growth, especially in the electric vehicle (EV) sector. Hero Motors’ decision to expand its production facility indicates the company’s focus on scaling its operations to meet growing demand. With its strong presence in key global markets, the company is well-positioned to capitalize on future opportunities in both electric and conventional automotive segments.
Though the IPO has been withdrawn for now, the future prospects of Hero Motors remain positive as it continues to serve leading OEMs and expand its capabilities in India and abroad.
