Kalpataru Power Transmission Ltd (KPTL) will merge its subsidiary JMC Projects (India) Ltd (JMC) with self, the two companies said on February 19.
The merger is aimed at leveraging on operational synergies, and financial benefits arising from a consolidated balance sheet and credit profile, which could help optimise liquidity and reduce cost of financing, leading to better profitability.
“We have taken an important step in our efforts and vision to create a leading global EPC company…By bringing together these two companies through merger, we are creating a strong platform to accelerate future growth, improve our competitive position and bring significant operational efficiencies. I am confident that the proposed merger of JMC into KPTL will enhance value for shareholders of both the companies,” said Mofatraj Munot, chairman, KPTL.
The board of the two companies approved the merger plan and according to swap ratio, JMC’s shareholders, other than KPTL, will be allotted one share of KPTL against every four shares held by them in JMC.
The consolidated KPTL will have revenue of over Rs 14,000 crore. The consolidated order book was worth Rs 37,000 crore as on end-December.
“This merger brings together two leading organisations with unique sets of capabilities and complementary businesses in the current attractive EPC markets. The merger will accelerate growth and enhance value creation for all stakeholders,” a statement from KPTL said.
The merger will enhance KPTL’s business portfolio and pre-qualifications by JMC’s expertise in civil works business. JMC, will be able to leverage KPTL’s expertise, global business access and financial flexibility to pursue value-creating opportunities by expanding the current business and bidding for large-size infrastructure projects. The companies said that the merger will drive immense operational synergies and cross learnings, thereby improving competitiveness to increase scale and relevance both in India and international engineering, procurement and construction (EPC) markets.
“The combined entity (post-merger) will possess a sectorally diversified portfolio of engineering and heavy construction capabilities, thereby creating one of the largest EPC companies in India with an estimated order book visibility (including L1) in excess of Rs. 37,000 crore. This entity will be present across all high growth sectors, with significant capital allocation across Government spend in the year(s) to come,” the statement said.
Post-merger, the entity will have footprints in over 65 countries across 5 continents. KPTL said that the combined entity will benefit from collective management expertise and the expertise of the combined workforce. The appointed date for the merger is set to be April 1, 2022, after the merger process is completed in the fourth quarter of FY23. The merger is subject to approvals from the Gujarat bench of the National Company Law Tribunal (NCLT), statutory authorities, stock exchanges, shareholders, creditors and such other authorities, as may be required.
Manish Mohnot, Managing Director and Chief Executive Officer, KPTL said, “KPTL will continue with its efforts to divest non-core investments in order to strengthen its balance sheet. We will drive a vision of being a USD 3 billion revenue organisation by 2025, with a strong balance sheet and stable margins.”
Post-merger, the combined entity will be present in businesses such as power transmission and distribution, buildings and factories, water projects, railways, oil and gas pipeline and urban infrastructure, which provides balanced earnings visibility and a resilient portfolio, the company said.
KPTL shares closed on Friday at Rs 389.35 a piece on the BSE, down 0.3 percent. JMC shares closed down 0.4 percent at Rs 92.75.
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