Kavrixa Drive Systems: the ₹1,400 crore question
1 · READ IT FIRST
A private equity fund has offered ₹1,400 crore for Kavrixa Drive Systems, a fictional maker of precision parts for passenger vehicles. The price is 10 times reported EBITDA. The sellers want a signature this week. You have four exhibits and four minutes.
Phone face down, feed closed. Read the numbers, the earnings call and the notes, then answer four questions written for your role. Everything you need is on this page. No timer to beat, no hints. It is the opposite of scrolling.
Exhibit A · Financial snapshot
₹ CROREFY24FY25FY26
Revenue520610740
Reported EBITDA7898140
Development cost capitalised (inside EBITDA)0624
Trade receivables90130250
Inventory7085150
Trade payables809585
Cash flow from operations5240−10
Gross debt110150210
Cash and bank253035
Net debt (as reported)85120175
Exhibit B · Management presentation, CFO Dhruv Kothari
ON GROWTHRevenue grew 21% to ₹740 crore, broad-based across customers and quarters.
ON EARNINGSEBITDA of ₹140 crore is a clean number. Margin is up from 16% to 19%.
ON LEVERAGENet debt is ₹175 crore, comfortably covered. There is no other borrowing.
ON WORKING CAPITALHigher receivables and stock reflect a bigger business and a deliberate buffer for our OEM customer.
ON R&DDevelopment spend is capitalised in line with accounting standards.
ON RELATED PARTIESAll related-party dealings are on commercial terms and routinely approved.
Exhibit C · Customers and quarters, FY26
CUSTOMERREVENUE ₹ CRSHARERECEIVABLE AT YEAR END ₹ CR
Orlenta Motors (OEM)28138%85
Tavrik Fabrication (related party)12016%105
All other customers33946%60
QuarterRevenue ₹ cr
Q1150
Q2160
Q3170
Q4260
Exhibit D · Annual report, contract and offer extracts
A fictional company, for learning and entertainment. General information, not professional advice.NOTE 11 · RELATED PARTIESTavrik Fabrication is owned by the managing director's family. Sales to it were ₹120 crore in FY26 (FY25: ₹40 crore).
NOTE 15 · INVENTORYStock older than 180 days: ₹40 crore, carried at cost. The auditor's emphasis of matter says the estimated realisable value is about half of cost, and management has not written it down.
NOTE 23 · CONTINGENT LIABILITIES(a) Receivables sold to a bank with recourse: ₹70 crore. (b) GST show-cause notice, FY23: ₹35 crore, no provision. (c) Bank guarantees given for the customer contract: ₹20 crore, not invoked.
SUBSEQUENT EVENTSBetween 1 and 30 April 2026 the company issued credit notes of ₹40 crore against invoices raised in Q4 FY26.
CONTRACT · CLAUSE 9, CHANGE OF CONTROLOrlenta may terminate on 90 days' written notice if control of Kavrixa changes without its prior written consent.
CONTRACT · CLAUSE 14, PRICE DOWNPrices to Orlenta fall 3% every year on like-for-like parts, with no change to volumes.
CONTRACT · CLAUSE 17, TERMThe agreement runs to 31 March 2029.
OFFER · PRICE AND PROTECTIONEnterprise value ₹1,400 crore, which is 10.0 times reported FY26 EBITDA of ₹140 crore. Equity price is ₹1,225 crore after reported net debt of ₹175 crore. 5% held in escrow for 12 months, general warranties only. Signing this week, with no confirmatory diligence.
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