End of 30-year partnership: MEIL's Krishna Reddy to acquire uncle’s controlling stake in the group

In addition, MEIL is considering the sale of its city gas distribution business, Megha City Gas Pvt Ltd, which currently operates in 62 districts across eight states including Punjab, Maharashtra, and Andhra Pradesh

Megha Engineering and Infrastructure Ltd (MEIL), one of India’s largest privately held infrastructure companies, is on the verge of a significant ownership transition, an Economic Times report said in Monday. According to sources cited by the ET, the founding partners—uncle-nephew duo PV Krishna Reddy and Pamireddy Pitchi Reddy—are finalising a family settlement that will see Krishna Reddy acquiring his uncle’s controlling stake in the group.

This buyout marks the end of a three-decade-long entrepreneurial partnership that began with the modest business of supplying pipes to municipalities. Over time, MEIL has grown into a $5-billion infrastructure conglomerate with diverse operations across India and abroad.

Krishna Reddy, whose net worth is estimated at $2.2 billion by Forbes, is reportedly working to raise Rs 12,000–Rs 15,000 crore to purchase his uncle’s 51% share in the holding company, adding to his existing 49% stake. The financial arrangement, which has been under discussion for over two years, was finalised recently with the involvement of a former Chief Justice of India to mediate and formalize the terms. The transaction is expected to be completed by March 2027.

To fund the settlement, Krishna Reddy is exploring multiple financing avenues. He is in advanced talks with private credit and special situation funds, including Kotak Alternate Asset Managers, Varde Partners, and Farallon Capital, the ET report added. Discussions are also ongoing with international banks such as Deutsche Bank. A significant portion of the required capital—nearly Rs 7,000 crore—is expected to be raised by monetising the company’s power transmission assets in western Uttar Pradesh, which have already attracted interest from Indian infrastructure firms.

In addition, MEIL is considering the sale of its city gas distribution business, Megha City Gas Pvt Ltd, which currently operates in 62 districts across eight states including Punjab, Maharashtra, and Andhra Pradesh. Talks with large global investors are underway, though a final deal has yet to be sealed.

So far, only around Rs 1,000 crore of the settlement amount has been paid. Insiders say that to raise additional funds, MEIL may also hive off the operations and maintenance division of Olectra Greentech, the group’s only listed entity. MEIL holds a 50% stake in Olectra, which manufactures electric buses and composite insulators. Between July 2023 and February 2024, Olectra’s share price more than doubled, peaking at over Rs 2,200, though it has since declined by 45%.

Citing sources, the ET report added that the buyout wasn’t without external interest. One of India’s wealthiest industrialists, known for significant investments in infrastructure, reportedly expressed interest in acquiring the senior Reddy’s stake. To block this move, Krishna Reddy is said to have sought support from influential political leaders.

Pamireddy Pitchi Reddy, known for his flamboyant personality, hails from Andhra Pradesh’s Krishna district. He brought his nephew into the business just two years after its founding. After initial success in irrigation projects, MEIL rapidly expanded into sectors such as roads, dams, tunnels, natural gas, hydrocarbons, and EPC services. In 2006, the company rebranded from Megha Engineering Enterprises to its current name.

Industry observers describe MEIL as a textbook example of how many Telugu entrepreneurs rose to prominence during the irrigation-focused governance of the late YSR Reddy. Similar to other southern infrastructure powerhouses such as GMR, IVRCL, and NCC, MEIL benefited from government contracts and rapidly scaled up its operations. Unlike many peers who faltered under debt burdens, MEIL continued to thrive.

However, the group has not been without controversy. It came under scrutiny after disclosures revealed it was the largest buyer of electoral bonds—worth ₹966 crore—raising questions about potential quid pro quo in government contracting. MEIL has consistently denied any wrongdoing.

Krishna Reddy is widely credited with driving the group’s global expansion. He spearheaded acquisitions in Italy and helped establish a joint venture with Chinese EV giant BYD. However, their electric vehicle manufacturing plans in India have stalled due to regulatory restrictions under Press Note 3, which limits investments from countries sharing a border with India—primarily aimed at China.

According to those close to the family, the decision of the elder Reddy to step down stems from his age. “He’ll turn 70 soon and is looking to retire,” said a family associate. “Krishna is now firmly in control, and the family managed to avoid infighting by reaching a financial understanding. While there were early disagreements over valuation, they were resolved. Krishna is now focused on raising funds and moving quickly on the buyout. An IPO in the future can’t be ruled out. The planned asset sales will also streamline the group’s large and diverse portfolio.”