Raymond Group to acquire 59.25% stake in Maini Precision for Rs 682 cr

Raymond Group on Friday announced the acquisition of 59.25 per cent stake in Maini Precision Products Limited (MPPL) for Rs 682 crore funded by a mix of debt and internal accruals. The transaction will be subject to requisite regulatory approvals and is expected to be completed during the current fiscal year, the company said in an exchange filing.
 

With this acquisition, Raymond's engineering business will emerge as a large‐scale provider of engineering, automotive, electric vehicle (EV), aerospace and defence components, distinctly positioned to target high‐growth precision engineering products with a significant presence across international as well as domestic markets, it said.

The acquisition will be concluded through Ring Plus Aqua Limited (RPAL), a subsidiary of JK Files and Engineering Ltd (JK Files). Post the acquisition, Raymond will consolidate JK Files, RPAL and MPPL businesses and will form a new subsidiary (Newco). Raymond Ltd will hold 66.3 per cent in 'Newco', which will focus on precision engineering products. The pro forma consolidated revenue of 'Newco' as of FY23 is Rs 1,600 crore with an EBITDA, or earnings before interest, taxes, depreciation, and amortization of Rs 220 crore.

Commenting on the development, Gautam Hari Singhania, chairman and managing director, Raymond Limited, said, "This acquisition will catapult the growth of our engineering business and will open new vistas to us for our foray into rapidly growing segments like aerospace, defence, and EV. Raymond Group has always believed in the 'Make in India' initiative and this acquisition will also provide an impetus to the China Plus One strategy that has been benefiting us."

Gautam Maini, founder of MPPL, said, "This strategic merger represents the harmonious integration of our diverse strengths, thus creating a platform for synergistic collaboration. Leveraging our core competencies, this partnership will usher in myriad opportunities for rapid growth and expansion, affording us a competitive edge in both international and domestic markets."

Raymond, in its transformation journey, has been demonstrating affirmative actions in the form of selling the fast-moving consumer goods (FMCG) business, demerging the lifestyle business and shaping the scalable real estate business. With this acquisition aimed at growing the engineering business significantly, Raymond Group has reiterated its intent that it will continue to have three distinct vectors of growth that will create shareholder value for each of the businesses, said the company.

With strong free cash generation and no major capex requirement, Raymond group will remain net cash positive post the transaction, it added.