Kalpataru Power Transmission Ltd (KPTL) will merge its listed subsidiary JMC Projects (India) with itself in an all-share swap deal to drive efficiency and scale of operations. The board of both the companies approved the proposal in meetings held on Saturday.

As per the proposed swap ratio, every shareholder of JMC holding four shares in the company would get one share in KPTL. The merger is expected to be completed by March next year.

Currently, promoter shareholding in KPTL is at 51.58 per cent. KPTL has 67.75 per cent stake in JMC Projects. Post-merger, promoter shareholding in the combined entity will be at 47.28 per cent, with the balance being with the public.

The combination of KPTL and JMC by way of merger will create one of the largest EPC (engineering, procurement and construction) companies in India, with orderbook (including L1) in excess of ₹37,000 crore (as on December-end 2021), consolidated annual revenue of ₹14,000 crore-plus (estimate for FY22) and project footprint spanning 67 countries across five continents, per KPTL’s statement. and presentation

Mofatraj Munot, Chairman, KPTL, said: “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.”

Increasing scale

Manish Mohnot, Managing Director, KPTL, observed that the combined businesses present a significant opportunity to increase scale and relevance both in India and international EPC market. KPTL will continue with its efforts to divest non-core investments in order to strengthen its balance sheet with a vision to achieve $3 billion revenue by 2025, he said.

Shailendra Kumar Tripathi, Managing Director, JMC said the merger will help realisation of combined benefits of both the companies and create attractive value for customers, employees and stakeholders.

The new entity will have a strong balance sheet and credit profile, which has the potential to optimise liquidity and reduce cost of financing, leading to better profitability, according to the statement.

The success and scale of the combined business ensures funding capacity and flexibility for simultaneous investment in core business, debt reduction and capital return to shareholders, KPTL said.

The merger will also enhance KPTL’s business portfolio and pre-qualifications by JMC’s expertise in civil works business., it added.

At the same time, JMC will be able to leverage KPTL’s expertise, global business access and financial flexibility, to bid for large-size infrastructure projects.

“With JMC’s proven civil works business capabilities, KPTL’s strong global footprint with ability to deliver projects on a global scale will result in significant opportunities for growth in existing and new geographies. KPTL’s local presence in Sweden and Brazil will also help to diversify into non-T&D businesses in these geographies.,” per the statement

Post-merger, the combined entity will have leadership positions in transmission and distribution, building and factories, water, railways, oil and gas pipeline and urban infra.