Sona BLW Precision Forgings Ltd. has entered into an agreement to acquire the Railway Equipment Division (RED) of Escorts Kubota. The transaction is being carried out for a lump sum cash consideration of Rs 1,600 crore, as a going concern, on slump-sale basis.
The proposed acquisition is expected to be earnings accretive for Sona Comstar right from the first year and offers significant growth opportunities, the company said in an exchange filing.
Railway Equipment Division of Escorts Kubota is a leading supplier of critical components for Railways, such as brakes and suspension systems for various rolling stocks. It reported revenue of about Rs 950 crore in FY24.
The acquisition of RED aligns with the vision of Sona Comstar as they intend to expand into the broader mobility sector, and it will enhance their clean mobility product offerings by adding railway components business.
Commenting on the proposed acquisition, Vivek Vikram Singh, MD & Group CEO of Sona Comstar, said: "Once completed, the ‘Railway Equipment Division’ acquisition will enhance our clean mobility product offerings by adding a market-leading railway components business."
"The railway industry presents long-term growth opportunities, and with the ‘Railway Equipment Division’ business, we see significant potential to broaden our product range by incorporating advanced technology and engineered products," he added.
The company on Wednesday also announced its September quarter results with net profit jumping 15.7 percent at Rs 143.6 Ccrore against Rs 124.1 crore on-year.
The revenue was reported at Rs 922.2 crore, rising 17.1 percent against Rs 787.5 crore, a year ago.
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