In a meeting, held on 12th March, 2019 the board of Mahindra CIE Automotive agreed the acquisition of Aurangabad Electricals Ltd. (AEL). They have acquired 100% of the issued and outstanding share capital of Aurangabad Electricals. The enterprise value of this deal is worth Rs 875.6 crore which is inclusive of a future deferred payment Rs 62.2 crore. The CEO of CIE Automotive Jesus Maria complimented AEL referring to the business they have built until now and it being sustainable. He also added that this partnership will provide important opportunities for both the companies. This deal will also assure the company’s shareholders their commitment towards the Indian automotive market. This will be a huge opportunity for for the company to expand its operations further in India. The acquisition is expected to be completed on or before 1 April 2019.

Objective of acquisition:

This acquisition is an entry for Mahindra CIE Automotive into the Auto Electricals, Aluminium Fasteners, Die Casting. This deal will help Mahindra CIE to increase its customer base. The CEO of MCIE Mr. Alvarez stated that the diversification of their portfolio is beneficial as well as requisite. He also stated that AEL has a good manufacturing process and internal control system and praised its team.

Aurangabad Electricals Ltd:

Aurangabad Electricals Ltd. are a market leading global full service supplier. Also a manufacturer of machined aluminium components for two and three wheeler, passenger cars, HCV, LCV etc. Their facilities are wide spread, the company having branches in the Western and Northern regions of India. Their main manufacturing bases are spread across Aurangabad, Pune and Pantnagar. The Bagla Group has made a significant contribution in enhancing the aluminium sector units of the company. Bagla Group is also promoter of AEL. They major in manufacturing services of high tensile fasteners and electrical components. The turnover of AEL for FY16, FY17 and FY18 was Rs. 565.8 crores, Rs. 569.3 crores and Rs. 651 crores respectively.

AEL has over 3300 employees, an estimated sales figure of Rs 8500 million and acts as a significant link thereby providing variety of products required for the manufacturing activity. Provision of multiple body, brakes and engine parts with the assistance of high pressure die casting and also gravity die casting is a crucial stage in this process. It is also capable of providing services for powder coating, assembly and leak testing, heat treatment, machining etc.

History:

Over the last three decades, AEL has built up a daunting reputation both in India as well as overseas. Managing Director of AEL Mr. Bagla stated that this reputation is because of the consistent supply of high quality aluminium die castings. He also stated that business is managed and operated by a very professional team who are capable to handle this acquisition. On the finalization of all the pending transactions regarding the acquisition, the Bagla Group will further focus on developing the industrial activities and businesses.

Stock Moment:

Mahindra CIE Automotive Ltd. was up by 0.27% trading at Rs 240.75 as on 12th March, 2019 on NSE.

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