Sona BLW Precision Forgings has entered into an agreement (Agreement) with Escorts Kubota (EKL) to acquire the Railway Equipment Division of EKL (RED), as going concern, on slump sale basis, for an enterprise value of Rs 1,600 crore.
RED is a leading supplier of critical components for Railways, such as brakes and suspension systems for various rolling stocks. RED reported revenue of approx. Rs 950 crore and approx. EBIT of Rs 179 crore in FY24. The proposed acquisition of RED is expected to be earnings accretive for Sona BLW Precision Forgings right from the first year and offers significant growth opportunities.
Commenting on the proposed acquisition of RED, Vivek Vikram Singh, MD & Group CEO of Sona BLW Precision Forgings, said: "We are delighted to step into railways components sector with the signing of the agreement to acquire Railway Equipment Division of EKL. The proposed acquisition of Railway Equipment Division aligns with our vision statement as we expand into the broader mobility sector. 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."