Raymond Group acquires stake in MPPL for Rs 682 crore, forays into aerospace, defence, EV comp biz

Indian fabric major Raymond Group recently said it is acquiring a 59.25% stake in Maini Precision Products Limited (MPPL) for Rs 682 crore, which will be financed through a combination of debt and internal accruals.

With this, Raymond Group will further strengthen its existing engineering business with a complementing business that has a presence in the sunrise sectors of Aerospace, Electric Vehicles (EV) and Defense.

Focusing on creating a precision engineering powerhouse

Following the acquisition, Raymond’s engineering business will emerge as a large‐scale provider of Engineering, Automotive, EV, Aerospace & Defense components, distinctly positioned to target high‐growth precision engineering products with a significant presence across international as well as domestic markets.

According to the company's statement, The acquisition will be executed via Ring Plus Aqua Limited (RPAL), a subsidiary of JK Files and Engineering Ltd, which is part of the Raymond conglomerate. 

Consolidating businesses

Raymond plans to consolidate JK Files, RPAL, and MPPL into a new subsidiary, tentatively referred to as "Newco." Raymond Ltd. will hold a 66.3% stake in this new entity, which will focus on precision engineering products, the release notes.

Notably, The proforma consolidated revenue of "Newco" for FY23 is estimated at approximately Rs 1600 crore, with an EBITDA of around Rs 220 crore.

Growth and synergy in the engineering business

Gautam Hari Singhania, Chairman & Managing Director, Raymond Limited said, “This acquisition will catapult the growth of our Engineering business MEDIA RELEASE and will open new vistas to us for our foray into rapidly growing segments like Aerospace, Defense, and Electric Vehicles (EV). Raymond Group has always believed in the ‘Make in India’ initiative and this acquisition will also provide an impetus to China Plus One strategy that has been benefitting us. These are growing sectors with visible momentum presenting us with ample opportunities to leverage.  I am pleased to welcome Gautam Maini, founder of MPPL to the leadership team of our engineering business and we will significantly benefit from his domain expertise and his vast experience."

What does MPPL do?

MPPL has a diversified business with 11 manufacturing facilities in India across two verticals, i.e., aerospace, which comprises precision products manufactured for aerospace and defence, and automotive and industrial, which comprises precision products for clean internal combustion engines, fuel injections and transmissions, EV components, hydraulics and industrial as well as agriculture. 

The company claims to have a 70% export contribution and generated around  Rs 750 crore in total revenue in FY23 with a 13% EBITDA margin.