Ratnamani Metals enters into definitive agreement to acquire Ravi Technoforge

News:

 RMTL has entered into a definitive agreement for the subscription of equity shares and acquisition of equity shares in Ravi Technoforge Pvt Ltd (RTL) from its existing shareholders in three tranches over the period based on the performance metrics and other terms and conditions. Subject to the satisfaction of the stipulated conditions precedents (CPs), RMTL shall hold ~53% stake on a fully diluted basis in RTL on the first tranche closing. The first tranche of ~53% stake acquisition shall consist of 26% of the issued, subscribed and paid up share capital through share subscription in RTL under preferential allotment and ~27% of the issued, subscribed and paid up capital in RTL (post dilution) through purchase from the existing shareholders. The first tranche i.e. ~53% of the issued, subscribed and paid-up equity share Capital in RTL is expected to be completed within 30 days while balance ~47% stake in RTL to be acquired in two tranches over the period of which the second tranche of ~27% is expected to be completed on or before July 31, 2024 and third tranche of ~20% to be completed not later than July 31, 2027. However, the acquisition of the third tranche shall be subject to certain options as may be availed by existing shareholders of RTL during that time.

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 RTL is one of the leading manufacturers of high precision forged and turned bearing rings, gear blanks and other similar bearing components having ultimate end use across widespread industrial and automotive applications. RTL caters mostly to all large bearing manufacturers not only in India but across the globe. RTL has three facilities and is based out of Rajkot, Gujarat. It has capabilities to manufacture rings ranging from 40-400 mm with unit weight up to 25 kg. RTL has forging capacity of ~ 32,400 MTPA along with sizable in-house annealing and machining capabilities. RTL is a consecutively profit making company, based out of Rajkot, Gujarat and has been into this business since 1990. In FY22, RTL reported a topline of Rs 281 crore, EBITDA of Rs 36 crore and PAT of Rs 10 crore. The net worth of RTL as on March 31s, 2022 was at Rs 70 crore. Cost of acquisition for the first tranche of ~53% is Rs 121.05 per share aggregating to Rs 97.88 crore and also an additional consideration of Rs 0.50 crore towards non-compete fee to obligators, which shall be paid over four years. For RMTL, this transaction will add a new growth driver both domestically and globally. The business prospects of the target resembles the economic growth cycle mainly manufacturing by significantly contributing the revenue from segments of industrial and mobility applications, which will help RMTL to enlarge its canvass of products and sector.

Impact:

Neutral.