Texmaco Rail and Engineering Ltd on Friday said its board has approved the acquisition of a steel casting foundry of manufacturing company Simplex Castings Ltd.
The steel casting foundry, located at Urla in Chhattisgarh state, will be bought at an enterprise value of Rs 87.7 crore ($12.5 million at current exchange rates), said Texmaco Rail and Engineering in a stock market disclosure.
The acquisition complements Texmaco's existing product range and will cater to the increased demand for its products.
Simplex Castings’ steel casting foundry generated revenues of Rs 73.53 crore in the fiscal ended 31 March 2018, accounting for 33.4% of the total revenue of the manufacturing firm.
The foundry is equipped with an electric ARC furnace which can produce single piece plain carbon steel castings, alloy steel castings and ductile iron casting. This foundry has sophisticated testing facilities spectrometers, hydrogen analyzers, cobalt and iridium radiography machines and ultrasonic testing equipment, among others.
Simplex Castings' other manufacturing facilities include a cast iron foundry and a heavy engineering and fabrication plant.
Texmaco is engaged in the business of manufacturing of rolling stock such as wagons, coaches, electrical multiple units (EMU), loco shells and parts. It also manufactures hydro-mechanical equipment, steel castings, rail engineering-procurement-construction (EPC), bridges and other steel structures.
The company's turnover fell to Rs 962.8 crore in the fiscal ended 31 March 2018 as compared with Rs 1,288. 2 crore in the previous fiscal while net profit during the period decreased to Rs 10.1 crore from Rs 33.6 crore.
Texmaco had last made an acquisition in 2016 when it had purchased a 55% equity stake in Mumbai-based Bright Power Projects (India) Pvt Ltd for an undisclosed amount.