Mumbai, Aug. 25
LARSEN & Toubro has entered into an agreement to acquire Nashik-based company Datar Switchgear Ltd under a scheme to be approved by the Board for Industrial and Financial Reconstruction (BIFR).
As part of the arrangement for its merger with L&T, the latter will assume debt of approximately Rs 24 crore. There will be no significant equity dilution for L&T post-merger; the debt assumption of Rs 24 crore may effectively be considered the cost of acquisition, said an official with L&T.
The acquisition is in line with L&T's plans to expand the product range in the low voltage electrical business.
After obtaining approval from Datar's lenders, the scheme will be filed with BIFR for its approval, after which, the matter will be put to L&T's shareholders.
The attraction of Datar for L&T lies in its products for the building electrical segment, which are well accepted, but which Datar could not exploit to its full potential, due to various constraints, said a release from L&T.
"Datar Switchgear brings with it a core technology available with very few manufacturers the world over," said L&T.
L&T is now marketing miniature circuit breakers and earth leakage circuit breakers imported from Hager, France, to service the premium end of the building segment. Datar has been manufacturing these items since 1984, said L&T.
With the products from Datar, L&T said it would serve both the premium and mass market in India where the building electrical segment has tremendous growth potential. L&T has already commenced work on product augmentation along with Datar.
Before the merger, Datar Switchgear will transfer its electronics business and other identified liabilities, including the award it has received under an arbitration with the Maharashtra State Electricity Board, and related litigation, to an identified company, said L&T.