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M&M arm to buy Aurangabad Electricals for Rs 875.6 crore

MCIE is an automotive components supplier to auto manufacturers in India, Europe and Mexico.

Automotive component supplier Mahindra CIE Automotive's (MCIE) board of directors on Tuesday approved the acquisition of Aurangabad Electricals (AEL). The acquisition will be done by acquiring 100 per cent of AEL's equity shares for an enterprise value of Rs 875.6 crore, which includes a future deferred payment estimated up to Rs 62.2 crore.

Aurangabad Electricals is a manufacturer of aluminium die-casting products based in Aurangabad. It manufactures body, brake and engine parts and supplies to a number of domestic and global two-wheeler and passenger cars manufacturers, especially Bajaj Auto, constituting 77 per cent of their business, with Bosch, Valeo and Ashok Leyland being the others.

AEL's turnovers during FY16, FY17 and FY18 were Rs 565.8 crore, Rs 569.3 crore and Rs 651 crore, respectively. It reported a profit of Rs 34.4 crore in FY18.

MCIE is an automotive components supplier to auto manufacturers in India, Europe and Mexico. While India forms 41 per cent of MCIE's business with Tata Motors, M&M and Maruti being the top customers, Europe constitutes 59 per cent of MCIE's revenues with Daimler, Renault and Volkswagen as major clients.

AEL's acquisition will help MCIE to enter the aluminium die-casting business, strengthen its presence in the two-wheeler segment and persify its customer base.

For the year ending December 31, 2018, MCIE reported a net profit of Rs 35 crore with a revenue of Rs 2,529 crore. Vikas Sinha, senior vice-president, strategy- MCIE said during a post-earnings conference call that the company had a capex of Rs 377.2 crore in CY2018 on a consolidated basis.

The acquisition will be an all-cash deal wherein MCIE will pay through cash on its balance sheet. The acquisition is expected to be completed by April 10, 2019. -FE