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Business Economy

Amara Raja announces backward integration of its business

Hyderabad, Sep 26 (UNI) Amara Raja Batteries Limited (ARBL), India’s leading industrial and automotive battery major on Monday announced a proposed transaction integrating its supply chain, leading to margin improvements by bringing the Plastics Component for Battery Business of Mangal Industries Ltd (MIL) into its own fold through a scheme of arrangement involving demerger of Plastics Component for Battery Business from MIL into ARBL (“Scheme”).
The Plastics Component for Battery Business of MIL caters exclusively to ARBL, providing plastic containers, covers, small parts, handles and jars that are used in batteries, the company said in a release.
It currently has a capacity of 37,000 plus MTPA with 150 Injection Moulding Machines located at three manufacturing facilities.
On 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 integration of the supply chain and bringing plastic moulding capabilities in-house.
The Company is expected to benefit from margin improvement and annual recurring post-tax synergies of INR 50 mn to INR 60 mn.
The proposed transaction is expected to be EPS accretive from the first year of it being effective.
Thee 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.
Mr. Jayadev Galla, Chairman & Managing Director of the Company, said “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.”
Harshavardhana Gourineni, Executive Director, Automotive & Industrial Batteries 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.”
The Company is a leading manufacturer of automotive batteries under the brands Amaron® and PowerzoneTM, which are distributed through a large Pan-India sales & service retail network.
The Company supplies automotive batteries under OE relationships to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, and Tata Motors. The Company’s Industrial and Automotive Batteries are exported to countries in the Indian Ocean Rim.
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