CASE STUDY · OPERATING LEASE
₹85 Cr production line.
Borrowing power intact.
How a leading Indian auto components group added a fully automated manufacturing line on a 60-month operating lease, without adding debt to its books.
CAPEX FINANCED
₹85 Cr
TENURE
60 months
STRUCTURE
Operating lease
ASSETS COVERED
Line expansion
THE CLIENT
A trusted supplier to OEMs across segments.
The client is a well-established name in the Indian automotive industry, supplying OEMs across segments with specialised components, assemblies and systems.
To meet demand, it planned a major manufacturing line expansion spanning painting automation, robotics, cylinder manufacturing and casting.
Client name withheld for confidentiality.
CLIENT PROFILE
₹4,000 Cr+
Annual revenue
5,000+
Employees
25+
Manufacturing units
10+
Group companies
THE CHALLENGE
A heavy line, and a balance sheet to protect.
Buying a full automated line outright would have meant a large cash outlay, more debt on the books and weaker tax shields.
High upfront capital requirement
Paint shop, cylinder manufacturing, casting machinery and automation lines involve a significant CapEx outlay.
Need for balance sheet optimisation
A traditional loan would have added debt to the books and reduced leverage headroom.
Tax inefficiency of owned CapEx
Owned plant and machinery qualifies only for limited depreciation, giving lower tax shields.
HOW CAPEXO STRUCTURED IT
A full line,
leased over 60 months.
Capexo financed the entire line expansion on an operating lease, turning a large capital outlay into a predictable monthly expense.
01
Capexo financed the line
₹85 Cr for a complete manufacturing line expansion, funded and owned by Capexo.
02
Leased over 60 months
The client ran the new line while paying monthly lease rentals over a 60-month tenure.
03
Rentals treated as OpEx
Lease rentals are an operating expense, so they are fully tax-deductible.
ASSETS COVERED
Complete painting automation line
Robotic arms
Cylinder manufacturing machinery
Heating and curing equipment
Wheel cutting and casting machinery
Control panels and ancillary electrical systems
FINANCIAL IMPACT
Better ratios from day one.
Improved ratios
Healthier debt-to-equity and TOL/TNW ratios.
Enhanced ROCE and ROA
An asset-light model lifted returns on capital and assets.
Full tax deductibility
Lease rentals count as OpEx, so they are 100% tax-deductible.
Predictable expense
CapEx became a predictable monthly expense.
KEY BENEFITS
What the lease made possible.
Five gains the client saw from leasing its machinery instead of buying it.
100% tax-deductible rentals
Lease rentals were fully deductible as an operating expense.
Debt-free expansion
The new line came online without new debt, and the balance sheet stayed clean.
Liquidity intact
Operational liquidity was preserved for day-to-day needs.
Faster deployment
No internal CapEx approvals or hurdles slowed the rollout.
More borrowing capacity
Headroom was preserved for future strategic projects.
RESULTS
On time, on budget.
Borrowing power intact.
The operating lease let the client deliver its expansion within the project timeline and budget, while optimising its balance sheet and keeping future borrowing power. It stayed financially flexible and tax-efficient while meeting key operational goals.
Delivered on timeline and budget
Balance sheet optimised
Future borrowing power preserved
Financial flexibility maintained
Maximum tax efficiency
Planning a line expansion?
Tell us what your plant needs. We'll show you how an operating lease could fund it.