The transaction is expected to improve the overall profitability margin.
Amara Raja Batteries Limited (ARBL), India’s leading industrial and automotive battery major (BSE: 500008 & NSE Code: AMARAJABAT), today announced a proposed transaction integrating its supply chain and leading to margin improvements by bringing Mangal Industries Ltd.’s (MIL).
Plastics Component for Battery Business into its own fold through a scheme of arrangement involving demerger of MIL’s Plastics Component for Battery Business into ARBL (“Scheme”).
MIL’s Plastics Component for Battery Business serves just ARBL, providing plastic containers, covers, minor pieces, handles, and jars used in batteries.
It presently has a 37,000+ MTPA capacity with 150 Injection Moulding Machines spread over three manufacturing locations.
On the effectiveness of the Scheme, the shareholders of MIL, as on the record date will receive 65 equity shares of ARBL for every 74 equity shares held by them in MIL, as consideration for the Scheme.
This proposed transaction will simplify the business operations by backward integrating the supply chain and bringing plastic moulding capabilities in-house.
The proposed deal is estimated to be EPS accretive in its first year of operation. The Company is expected to benefit from margin improvement and annual recurring post-tax synergies of INR 50 mn to INR 60 mn.
The Scheme is subject to the necessary statutory and regulatory approvals, including approvals of NCLT, the stock exchanges, SEBI, and the respective shareholders of each of the companies.
“This is in keeping with our theme of consolidating and unlocking synergies as we continue to pursue value accretive growth opportunities that will lead ARBL to the leadership position in the Energy and Mobility space. This step is in alignment with the best interest of our shareholders.”
Mr. Jayadev Galla, Chairman & Managing Director of the Company, said,
“The move strengthens ARBL’s control of the supply chain and augments our battery recycling initiatives. It also helps us in improving margins by better utilization of manpower and reducing logistics costs.”
Harshavardhana Gourineni, Executive Director, Automotive & Industrial Batteries, adds
About Amara Raja Batteries Limited
Amara Raja Batteries Limited is an Energy and Mobility enterprise and one of the largest manufacturers of energy storage products for both industrial and automotive applications in the Indian battery industry.
Amara Raja is the preferred supplier in India to major telecom service providers, telecom equipment manufacturers, the UPS sector (OEM & Replacement), Indian Railways and Power, and Oil & Gas, among others. PowerStack®, AmaronVolt®, and Quanta® are Amara Raja’s industrial battery brands.
The Company is a leading manufacturer of car batteries under the trademarks Amaron® and PowerzoneTM, which are sold and serviced through a wide Pan-India retail network.
The company distributes automotive batteries to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, and Tata Motors through OEM relationships.
Industrial and automotive batteries manufactured by the company are shipped to countries along the Indian Ocean Rim.
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