Gravita India to Acquire RMIL for ₹565 Crore in Strategic Move

Introduction to the Strategic Acquisition

Gravita India Limited, a prominent name in the recycling industry, has announced a significant expansion by signing a binding term sheet to acquire up to 100% of the equity share capital of Rashtriya Metal Industries Limited (RMIL). The deal, valued at a maximum consideration of ₹565 crore, marks a pivotal step in Gravita's strategy to diversify its operations and strengthen its market position. The acquisition is slated for completion by March 31, 2026, pending the successful conclusion of due diligence and fulfillment of other customary conditions. This move is not just an expansion of capacity but a strategic entry into the copper recycling business, aligning with the company's focus on the circular economy.

Profile of Rashtriya Metal Industries Limited (RMIL)

Established in 1946, Rashtriya Metal Industries Limited has a long-standing history in the non-ferrous metals sector. The company specializes in manufacturing a range of copper and copper alloy products, including strips and coils. RMIL has built a robust global presence, exporting its products to several countries such as the UAE, USA, Thailand, Sri Lanka, Oman, Saudi Arabia, Kenya, and Indonesia. The company's financial health is solid, with a reported net worth of ₹300 crore and total assets valued at ₹558 crore as of March 31, 2025. This strong foundation makes it an attractive target for acquisition.

RMIL's Financial Performance

RMIL has demonstrated consistent and impressive growth in its turnover over the past three fiscal years. This upward trajectory highlights the company's operational efficiency and growing demand for its products in both domestic and international markets. The consistent revenue growth underscores the value and potential that Gravita India aims to integrate into its own operations.

Details of the Transaction

The acquisition will be settled through a cash consideration and has been confirmed as a non-related party transaction, ensuring transparency and adherence to corporate governance standards. Upon completion, RMIL will operate as a subsidiary of Gravita India. This integration is expected to significantly bolster Gravita's capabilities in the copper and copper alloy segment, creating a more diversified and resilient business model. The deal structure is straightforward, aiming for a smooth transition and integration process post-completion.

Strategic Rationale and Market Synergy

This acquisition is a key component of Gravita India's long-term strategic vision. By entering the copper recycling business, Gravita complements its existing leadership in lead, aluminum, and plastic recycling. The move allows the company to capitalize on the growing global emphasis on sustainability and the circular economy. The synergies between Gravita's established recycling infrastructure and RMIL's manufacturing expertise are expected to unlock significant value, enhance operational efficiencies, and create new revenue streams. This diversification reduces dependency on any single commodity and positions Gravita for sustained growth.

Gravita India's Recent Financial Health

Gravita India's decision to pursue this acquisition is backed by its own strong financial performance. In its recent quarterly results, the company reported a 25.3% year-on-year increase in consolidated net profit, reaching ₹97.7 crore. This growth was driven by a sharp expansion in operating margins, which grew to 11.8% from 8% in the previous year. The company's EBITDA saw a substantial rise of 49.3% to ₹120.2 crore, while revenue grew 2.1% to ₹1,017 crore. This robust financial standing provides a solid foundation to fund and integrate the new acquisition effectively.

Key Acquisition Details

Potential Risks and Outlook

The primary risk associated with the transaction is the satisfactory completion of the due diligence process. Any unfavorable findings could potentially alter the terms or timeline of the deal. Beyond the transaction phase, the successful integration of RMIL's operations, culture, and technology into Gravita's framework will be critical. The ability to effectively scale the new copper recycling venture and realize the projected synergies will determine the long-term success of this strategic move. Investors and market analysts will be closely watching for updates on these fronts.

Market Response and Conclusion

The market has responded positively to the announcement. Shares of Gravita India Ltd saw an increase, closing at ₹1,673.95, up by 1.82% on the BSE following the news. This acquisition represents a forward-looking strategy by Gravita India to diversify its portfolio and tap into the high-growth area of copper recycling. By leveraging RMIL's established manufacturing capabilities and export network, Gravita is well-positioned to become a more integrated and formidable player in the global metals and recycling industry. The successful execution of this deal could pave the way for significant long-term value creation for its stakeholders.