Four new billionaire promoters for booming auto industry in last 20 months

The Bajajs, Munjals, and Mahindras have long been automobile billionaires. But the list is rapidly expanding. A booming automobile industry has created four new billionaire promoters in the last 20 months and a fifth businessman is likely to join the league when Varroc Engineering lists next week. Based on the value of shareholding, promoters of tyremakers Madras Rubber Factory (MRF) and Balkrishna Industries, and component makers Minda Industries and Endurance Technologies are now worth over $1 billion (Rs 68.50 billion). 

Traditionally, promoters of original equipment manufacturing companies (vehicle makers) have figured in the list of automobile billionaires. However, growth of the industry is now bringing newer faces from the auto component sector. The component space had billionaires like V C Sehgal (Motherson Sumi), but this list is now getting wider. 

Figures are as on July 2, 2018 Source: BSE

Take the phenomenal growth in valuations seen by Minda Industries in recent years. The component maker, which gets over one-fifth of revenue from the country’s biggest carmaker Maruti Suzuki, was valued at less than Rs 5 billion just four years ago. Based on Monday’s close, its market capitalisation (m-cap) is over Rs 108 billion, making the value of promoter Nirmal Minda’s 71 per cent stake Rs 77 billion. 

“We had hoped to get such a valuation in 2018-19, but with growth in business and performance we achieved it a little ahead in 2017-18. Nothing changes for me. As a team, we continue to work towards creating value for all stakeholders,” said Nirmal Minda, chairman and managing director. The company is looking for growth from newer segments like airbags, reverse parking systems, and alloy wheels. 

While Minda gets most of its revenue from the booming car industry, Aurangabad-headquartered Endurance Technologies is driven more by two- and three-wheelers. The company, run by Rahul Bajaj’s nephew Anurang Jain, started as a supplier of parts to Bajaj Auto, but is now a well-diversified supplier to other leading brands. It listed in October 2016 with an m-cap of Rs 91 billion, turning Jain a billionaire (promoters own 82.50 per cent of shares). Since then the m-cap has expanded to Rs 172 billion and promoters’ stake is now worth Rs 142 billion. “To be honest, I do not keep an eye on these movements. I am a billionaire because of the company and my focus is to grow the business,” said Jain.  

India is now the world’s biggest two-wheeler market and the fifth-largest passenger vehicle market. The industry sold a record 20 million two-wheelers in the domestic market last year and passenger vehicle sales of 3.28 million units were also at an all-time high, leading to demand for components as well as tyres. Year 2018-19 is projected to be another record year for both the vehicle segments.

The growth story of two tyremakers — MRF and Balkrishna Industries — has made promoters on both these firms billionaires. Balkrishna, which specialises in off-highway tyres, saw its valuations double in the first three quarters of 2016-17 to Rs 118 billion, making the promoters billionaires. Its stock has rallied further since then and the company is now valued at Rs 207 billion, giving promoters a valuation of Rs 121 billion for their 58.30 per cent stake. The Poddars declined to participate in this story. 

It is now the second-most valued tyremaker in the country after MRF. Chennai-headquartered MRF, which is the biggest tyre player in the country, also has the distinction of being the most expensive Indian stock (it closed at Rs 75,099 a share on Monday). MRF’s m-cap hit a new high of Rs 250 billion in March last year, making the promoters’ shareholding of 27.54 per cent worth over $1 billion. The stock has gained further and based on Monday’s close, the m-cap is Rs 318 billion, while promoters’ (Mammen brothers) stake is now valued at over Rs 87 billion.

The fifth candidate waiting to join the list is Varroc promoter Tarang Jain, the twin brother of Anurang Jain. According to an Angel Broking report, the firm could command a post-initial public offering m-cap of Rs 130 billion when its lists next week. The promoters’ shareholding of 85 per cent (after listing) could be valued at about Rs 110 billion.