Amara Raja Batteries said it has proposed a transaction to integrate the battery plastic component business of Mangal Industries into its fold through a scheme of arrangement.
The process involves the demerger of Mangal Industries’ plastics component battery business with the company, Amara Raja Batteries said in a statement.
Mangal Industries caters exclusively to Amara Raja, providing it with plastic containers, covers, small parts, handles and jars that are used in batteries, it added.
It currently has a capacity of over 37,000 MTPA with 150 injection moulding machines located at three manufacturing facilities.
On the effectiveness of the scheme, the shareholders of Mangal Industries will receive 65 equity shares of Amara Raja for every 74 equity shares held by them in Mangal Industries, the battery maker stated.
This proposed transaction will simplify the business operations by backward integration of the supply chain and bringing plastic moulding capabilities in-house, it added.
The company is expected to benefit from margin improvement and annual recurring post-tax synergies of Rs 5 crore to Rs 6 crore. The proposed transaction is expected to be EPS accretive from the first year of it being effective, Amara Raja Batteries said in a statement.
“This is in keeping with our theme of consolidating and unlocking synergies as we continue to pursue value accretive growth opportunities that will lead the company to the leadership position in the energy and mobility space,” Amara Raja Batteries Chairman & Managing Director Jayadev Galla said.