Raymond enters aerospace biz with Maini Precision acquisition for ₹682 cr

Branded fabric and fashion retailer Raymond group has forayed into aerospace business, with the acquisition of 59.25% stake in Maini Precision Products Ltd (MPPL) for ₹682 crore via a mix of debt and internal accruals.

For Raymond, the acquisition is a "strategic move" to strengthen its existing engineering business, with a complementing business that has presence in aerospace, electric vehicles (EV) and defence. The company says it consolidated business caters to the top global OEMs and tier 1 manufacturers across aerospace, defence, auto, and industrial businesses.

"With this 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," says the company via a stock exchange filing.

Reacting to the development, Ramond Ltd shares surged 4.7% to rise to intra-day high of ₹1,904.75 on the BSE. At the current share price, the m-cap of the company stands at ₹12,442.63 crore. The Raymond stock has surged 48.82% in the past one year, and rose 25.11% in the year-to-date period.

The acquisition will be concluded through Ring Plus Aqua Ltd (RPAL), a subsidiary of JK Files and Engineering Ltd (JK Files). Post this, Raymond will consolidate JK Files, RPAL and MPPL business and will form a new subsidiary (“Newco”) in which it'll hold 66.3% stake.

The company says proforma consolidated revenue of “Newco” as of FY23 are ₹1,600 crore with an EBIDTA ₹220 crore. “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,” says Gautam Hari Singhania, Chairman & Managing Director, Raymond.

He said Gautam Maini, founder of MPPL, will now lead the team of Raymond’s engineering business.

In terms of business, MPPL has 11 manufacturing facilities in India across two verticals i.e., aerospace, comprising precision products for aerospace and defense, and automotive and industrial, that comprises precision products for clean internal combustion engines, fuel injections and transmissions, EV components, hydraulics and industrial as well as agriculture. MPPL has a 70% export contribution and generated around ₹750 crore in total revenue in FY23 with 13% EBITDA margin.

On the latest development, Maini says the strategic merger will create a platform for synergistic collaboration. “Leveraging core competencies, this partnership will usher in myriad opportunities for rapid growth and expansion, affording us a competitive edge in both international and domestic markets,” says MPPL founder.

Raymond says in its transformation journey, it has shown affirmative actions by selling its business, demerging the lifestyle business and shaping the scalable real estate business. Now Raymond wants to continue to have three distinct vectors of growth, says the company, adding that it the group remains “net cash positive” post the transaction.