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Diamond Power Infrastructure Ltd (DPIL), an integrated player in the power equipment and EPC segment, signed a memorandum of understanding (MoU) with Orissa-based Utkal Galvanizers Ltd on Wednesday to acquire a strategic stake in the company, subject to successful completion of all standard equity investment processes and approval by the board of the Vadodara-based company.
Mr Amit Bhatnagar, Managing Director, DPIL, said the board of directors had, after due diligence, decided to acquire a stake in the Orissa company on the basis of its audited numbers for the current financial year. The financial consideration for stake-taking will be seven times the PAT of Utkal Galvanizers in 2010-11, he told Business Line .
BSE-listed DPIL will fund this stake through its internal accruals, he said, adding that the process of equity participation will be completed in the next 30 days.
In 2007, DPIL had acquired two companies, Western Transformers Ltd and Apex Transformers Ltd, for Rs 3 crore and Rs 48 crore, respectively. These two subsidiaries of DPIL now have revenues of nearly Rs 20 crore and Rs 250 crore, Mr Bhatnagar said.
Established in 1970, DPIL's order book stands at Rs 1,650 crore as on March 31, 2011. Its FY 2009-10 sales were Rs 847.65 crore with a PAT of Rs 61.52 crore. It has two manufacturing plants at Vadodara and Silvassa, respectively. DPIL is the only domestic player in India to manufacture EHV cables, an import substitute product.
Utkal Galvanizers is associated with the power sector for extra-high voltage (EHV) power transmission, right from the concept of design to commissioning of EHV towers, substations and other lattice structures.
The company has set up substations of 400 KV both in India and abroad.
It is an approved vendor and an EPC contractor of Power Grid Corporation of India Ltd for various EHV transmission products.
Mr Suresh Bhatnagar, Chairman, DPIL, said that with the strategic stake in Utkal, DPIL will be able to leverage its presence by serving all segments of the power T&D industry.
Mr K.K. Mohanty, founder and Managing Director of Utkal Galvanizers Ltd, said the company's association with DPIL will enable it to leverage on its expertise and achieve exponential growth over the next five years.
On the BSE, the Diamond Power stock ended down 0.35 per cent at Rs 171.80 on Wednesday.
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