In one of the major restructurings in its history, leading auto parts house Rane Group has decided to merge two of its listed companies – Rane Brake Lining and Rane Engine Valve — with its other listed company, Rane (Madras).

The proposed reorganisation will bring all operating business subsidiaries under one single company, and it will create a larger company with a combined turnover of ₹3,373 crore for the trailing 12 months period ended December 31, 2023 (January-December 2023) on a proforma basis.

The merger move has been decided with a view to create a unified platform to drive future growth, said the company.

The Board of Rane (Madras) Ltd (RML), Rane Brake Lining Ltd (RBL), and Rane Engine Valve Ltd (REVL), at their respective meetings held on Friday, approved the proposed reorganisation through a scheme of arrangement which entails the merger of RBL and REVL into RML.

“We welcome the respective Boards’ decision to approve the proposed reorganisation, which allows all shareholders to participate in the growth of a larger auto component player with diversified product lines with exposure to the attractive automotive industry. The merger will help unlock various synergies among the businesses and enhance stakeholder value for the long term,” said L Ganesh, Chairman of the Rane Group.

The group said the merger significantly simplifies the group structure by consolidating listed operating companies and aligns public shareholders’ interest by converging their stake at a single listed entity.

After the merger scheme becomes effective, RBL shareholders will receive 21 fully paid-up equity share(s) of RML for 20 fully paid-up equity share(s) of RBL held by them as of the record date. REVL shareholders will receive 9 fully paid-up equity share(s) of RML for 20 fully paid-up equity share(s) of REVL held by them as of the record date.

The respective Boards approved the entitlement ratio based on the recommendations of independent valuers.

The group expects the merger scheme to result in the simplification of the group structure to capture the full value of the listed operating businesses of the group. It will unlock synergies leveraging stronger business connect across product lines and enhancing operational and financial efficiencies through scale. Also, the creation of a larger entity increases flexibility to raise capital for growth pursuits, both organic and inorganic.

In the merged entity, Rane Holdings, the holding company of the group, will have a 63.8 per cent stake, and Nisshinbo will have 6.06 per cent, while others have the remaining 30.14 per cent.

The merged entity, Rane (Madras) Ltd will have 4 major product segments — steering and suspension (55 per cent), friction materials (19 per cent), valve train parts (16 per cent), and light metal castings (8 per cent).

The merger scheme is subject to the necessary regulatory and customary approvals. Implementation of the scheme is expected to take 9-12 months subject to receipt of the requisite approvals, said.

In FY23, Rane Group’s revenue stood at ₹6,690 crore (about $820 million). It also runs two joint venture companies — ZF Rane Automotive Pvt Ltd and Rane NSK Steering Systems Pvt Ltd. Overall, it runs 27 factories across India and serves customers in more 30 countries. The group employs 14,516 people.

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