Shares of Rane (Madras) (RML) moved higher by 19 per cent to Rs 578.50 on the BSE in Wednesday's intra-day trade, in an otherwise weak market, after the company announced that its board has decided to explore options for divestment / disposal of Rane Light Metal Casting Inc., USA (LMCA).
LMCA is a wholly owned step-down subsidiary of the company acquired in 2016. The company is engaged in the business of manufacturing high pressure aluminium die casting for automotive and non-automotive applications.
LMCA accounts 9.78 per cent (Rs 231.94 crore) of total consolidated turnover and 13.33 per cent (Rs 32.20 crore) net worth of RML.
"After carefully reviewing operational and financial performance of LMCA, the board of directors of the company has decided to explore options for divestment / disposal of LMCA and seek prior approval of the shareholders for the same through postal ballot," RML said in exchange filing.
RML is a leading manufacturer of steering and suspension products and light metal casting components. The company had posted consolidated profit after tax of Rs 9.50 crore for March quarter (Q4FY23) as against net loss of Rs 2.5 crore in Q4FY22. Total revenue increased 23.5 per cent to Rs 630.10 crore from Rs 510.30 crore in the year-ago quarter.
Sales to Indian OE customers grew 18 per cent, supported by strong demand across vehicle segments. Export sales grew by 45 per cent, driven by strong off-take for steering products. Standalone Ebitda margin improved by 71 bps due to better operational leverage, favourable mix and forex was partially offset by increase in administration expenses, the company said, adding that the demand environment in the US remained challenging with multiple customers reducing schedules.
RML posted strong revenue growth, supported by robust demand environment in India and strong off-take from international customers. Though the management said it sees slowdown in major global economies, the growth momentum across vehicle segments in India continues to remain strong.
The turnaround planned in the US subsidiary had a setback due to poor offtake in the new business developed and even existing business. The board is closely monitoring the situation and will review the best decision regarding the future of this business considering the long term interests of the Company, the management had said while announcing Q4 results on May 5.
