Mahindra & Mahindra's component manufacturing arm, Mahindra CIE's (MCIE's) board of directors today approved 100 percent equity acquisition of Aurangabad Electricals (AEL) for an enterprise value of Rs 857 crore, which includes a future deferred payment estimated up to Rs 62.2 crore .
Founded in 1985, AEL is a leading manufacturer of automotive aluminium die casting products based in Aurangabad, India. The company, which has five manufacturing facilities including those at Aurangabad, Pune and Pantnagar, is promoted by the Bagla Group and led by Rishi Bagla. It has over 3,300 employees, sales of Rs 850 crore and an EBITDA margin near 12 percent.
Mahindra says AEL is a key supplier to a number of domestic and global two-wheeler and passenger car OEMs and Tier 1 companies. It manufactures a variety of body, brake and engine parts through high-pressure die casting as well as gravity die casting processes. The company also has capabilities for machining, heat treatment, powder coating, assembly and leak testing, along with a modern tool room.
Commenting on the acquisition, Jesus Maria Herrera, CEO, CIE Automotive, "We welcome AEL and team to the CIE family. We are very impressed by the business they have built and its sustainable and profitable growth. We believe that their integration in MCIE will provide important opportunities for both MCIE and AEL. This transaction also reinforces CIEJs commitment to the Indian automotive market and is a new opportunity to further extend the CIE model of manufacturing excellence in India."
Ander Arenaza, CEO, MCIE, said: "This acquisition allows MCIE to enter the aluminium die-casting technology. Its complementary product and customer mix leads to further diversification of the business portfolio of MCIE India, strengthening especially our presence in the two-wheeler space. It has very good manufacturing processes and internal controls and is run by a capable team."
Rishi Bagla, chairman and MD, AEL, said: "AEL has built up a formidable reputation as a high-quality supplier of automotive aluminium die-castings in the Indian and international market over the last three decades. While AEL has been a family owned business, it has been operated and managed by a very professional management team. We are convinced that the partnership with MCIE and CIE will give the company a great boost and allow AEL to benefit from global best practices in aluminium die casting. We share a wonderful relationship with CIE based on mutual respect and trust and this has given us great confidence to enter into this strategic transaction. With the proceeds of the transaction, the Bagla group will further develop its industrial activities and businesses."
For MCIE, this transaction marks its foray entry into automotive aluminium die casting, which will help it increases revenues and profits in India. This also strengthens MCIE's presence in two-wheeler segment, and diversifying its customer base.
The acquisition is proposed to be completed on or prior to April 10, 2019.