Mumbai, August 6 :KEC International Ltd. (KEC), part of the Rs. 11,500 crore RPG Group, today said that its Board as well as the Boards of RPG Transmission Ltd. (RPGT) and National Information Technologies Limited (NITEL) has approved the amalgamation of the latter two companies into KEC International Ltd. pending legal and statutory approvals.
The combined entity will boast the largest production capacity in the world for tower manufacturing. This merger will enable KEC -- one of the largest Transmission EPC companies in the world -- with operations in over 16 countries, to leverage manufacturing synergies, capital, human resource and technical expertise to grow its business to enhance shareholder value. The telecom expertise through NITEL provides operational and marketing synergies.
Turnover of the merged entity for financial year 2007 stands at Rs. 2538 crore with an EBITDA of Rs. 301 crore and a combined order book of over Rs. 3800 crore. Taking current L1 positions into account, the figure swells to over Rs. 5000 crore.
“Leveraging this expertise towards the fast growing telecom infrastructure space enables integration of project and asset management functions; Improved resource utilization; Procurement, finance and administrative cost savings; Enhanced cross-selling and marketing opportunities,” said Ramesh Chandak, Managing Director, KEC International Ltd.
RPGT is engaged in the business of EPC Contracting in transmission and rural electrification – a business that is similar to that of KEC.
NITEL is engaged in the business of setting up and operating telecom infrastructure – it possesses proven expertise and qualifications in an industry, which, by all accounts, is on the threshold of exponential growth.
The investment division of KEC, comprising investments in the shares of RPGT, will be de-merged into a separate company.
“This merger makes immense economic, business and operational sense. It will position the combined entity to greatly enhance shareholder value. Marrying the reach and capability of KEC -- which gets over 70% of its revenue from overseas markets -- with the domestic market and manufacturing strength of RPGT will enable superior infrastructure solutions.
“Leveraging this combination of manufacturing scale to decisively capture market share in the booming telecom infrastructure space with NITEL’s outstanding telecom technical and project credentials, will ensure a very bright future for us. And, we will hit the road running because the issue of cultural integration with most mergers is irrelevant. We all belong to the same Group,” said Mr. Chandak.
Telecom will be the trump card. This will be a critical differentiating feature for KEC in the EPC space. “NITEL’s USO Fund project, establishing 384 tower infrastructure sites across Central and North-East India on a BOO basis creates a sustainable revenue stream and a strengthened asset position,” said Mr. Chandak.
When this three-way merger is completed, the combined entity will become a diversified infrastructure EPC global major.
KEC International Ltd., an RPG Group Company, is one of the largest power transmission engineering, procurement and construction (EPC) companies. KEC has established a reputation in over 40 countries and currently operates in over 16 countries across South & Central Asia, the Middle East, Africa and North America.
RPG Transmission Ltd. (RPGT), an RPG Group Company, is a leading power transmission and railway electrification company operating in India and SAARC countries. RPGT is an industry pioneer with one of the largest manufacturing capabilities in India with a capacity of 55,000 metric tones.
National Information Technologies Limited (NITEL), an RPG Group Company, is an Engineering, Procurement & Construction (EPC) company engaged in the field of establishing telecommunication networks in India and overseas.
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