Home / Companies / Saroj Poddar’s Texmaco Rail to merge Kalindee Rail with itself

Mumbai: Texmaco Rail and Engineering Ltd will merge Kalindee Rail Nirman (Engineers) Ltd with itself after acquiring a controlling stake in the firm that makes railways infrastructure including signalling and telecommunications through an open offer.

Shareholders of Kalindee Rail will get 106 shares of Texmaco Rail for every 100 shares held, according to the proposed merger scheme. Texmaco Rail held 41.59% in Kalindee Rail as of 31 March.

The Kolkata-based rail wagon maker Texmaco bought a controlling stake in Kalindee Rail in an open offer, outbidding Jaipur-based engineering and construction company Jupiter Metal Pvt. Ltd in 2013.

The Delhi high court has directed the companies to convene meetings of shareholders, secured creditors and unsecured creditors of Kalindee Rail on 11 July.

In its filing to stock exchanges, Texmaco said the consolidation of the businesses presently being carried on by both companies will create greater synergies between the business operations and result in optimal utilisation of resources because of pooling of management, administrative and technical skills of various resources, better administration, and cost reduction, including reduction in managerial, administrative and other common costs.

Explaining the rationale of the merger, Texmaco said it will create a larger asset base, facilitate access to financial resources and create value for shareholders.

A.K. Vijay, executive director of Texmaco Rail, did not respond to calls seeking comment.

A person close to the development said Kalindee Rail will function as a division of Texmaco Rail in the future.

“The management of Texmaco Rail has already taken over the operations. There will be more management changes too. A clear cut strategy of synergy on proposed merger is yet to emerge," he said, requesting anonymity.

Kalindee Rail offers services in the areas of signalling, telecommunications, track and information systems and has plans to further diversify into electric traction system, traffic management systems, traffic surveys, and project evaluation, according to its website.

Texmaco Rail makes railway freight cars, hydro-mechanical equipment, industrial structures and steel castings.

Texmaco emerged as a white knight after Jupiter launched a hostile bid for Kalindee in early July 2013.

Kalindee Rail is promoted by R.D. Sharma, who is also the chairman and managing director of the company.

According to a 22 June report by Deutsche Bank AG, Indian Railways is likely to invest $140 billion in projects till financial year 2018.

“It makes sense for Texmaco Rail to merge Kalindee Rail with itself. Texmaco Rail can lead Kalindee Rail to diversify into metro viaduct and tunnels, electric traction system and traffic management," he said.

Shares of Kalindee Rail lost 0.33% to 121.10 on Wednesday on the BSE, while the benchmark Sensex shed 0.27% to close at 27,729.67 points and Texmaco Rail & Engineering Ltd gained 0.41% to 122.60.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Recommended For You
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout