Mumbai: The board of KEC International Ltd. approved on 6 August merging group firms RPG Transmission Ltd. and National Information Technologies Ltd., to boost size by bringing together similar businesses.
KEC will issue four of its shares for every nine held in RPG Transmission, and two shares for every 15 held in National Information Technologies, it said in a statement.
“There will be operating cost synergies...all three have complementary assets and skills, and the large size will allow us to lower costs and enhance delivery,” KEC’s Managing Director Ramesh Chandak told reporters.
However, he declined to quantify the savings because of the merger.
Chandak said the combined entity would have the largest tower manufacturing capacity in the world, at 140,000 metric tonnes, and will have a combined order book, including least-cost bids, of about Rws50 billion.
“This will allow us to bid for more large size projects in the 5-10-billio- rupee range, and also to focus on the fast-growing telecom infrastructure space,” he said.
The three companies will merge effective 1 October 2007, and the entire process should be completed by the year end, he said.
KEC operates as an engineering, procurement and construction contractor in the power transmission segment, and gets 70% of its revenues from overseas markets including Africa, central Asia, south-east Asia and North America.
RPG Transmission operates in the same business, but is more focussed on the South Asia market. National Information operates as an EPC contractor for telecom towers and also operates some rural telecom tower sites in central and north-east India.
KEC’s board also approved spinning off its holding in RPG Transmission into a separate company, of which two shares will be issued for every 25 shares held by KEC shareholders.