RPG sets ratio for merger of arms

KEC International, an infrastructure company of RPG Enterprises, will issue four equity shares for every nine shares held by the shareolders of RPG Transmission (RGPT). It will also issue two equity shares of the company for every 15 shares held by the National Information Technologies (NITEL) shareholders.

The share swap ratio was announced today after the boards of the three companies approved the merger of RPGT and NITEL with KEC. The merger scheme also proposed a spin-off of the investment division of KEC into a separate entity. The appointed date for the merger has been fixed for October 1 and the merger formalities, including the receipt of the required approvals, are expected to be completed by the end of March next.

KEC Managing Director Ramesh Chandak said the merger would create the largest tower manufacturing company in the world with a capacity of 140,000 mega tonne (mt) a year, almost double the capacity of its immediate competitors such as Kalpatharu Power and the transmission business of Asea Brown Boveri (ABB).

The combined entity would have a turnover of Rs 2,538 crore, with an EBITDA of Rs 301 crore and a combined order book of Rs 5,000 crore, he added.

"Major tower capacities are in India, Mexico, Turkey, Saudi Arabia, Brazil and Yugoslavia. Leveraging the expertise of telecom infrastructure space through NITEL will be a major advantage for KEC as it enables integration of project and asset management, improved resource utilisation, procurement, finance and administrative cost savings. Further, this will help KEC to participate in larger tender projects," he said.

The Rs 60 crore NITEL is involved in creating communication network infrastructure and has bagged four clusters under the Universal Service Obligation (USO) fund "" an obligation on the part of telecom operators to create infrastructure in rural areas for setting up 384 cell sites in Chhattisgarh, Mizoram and Meghalaya.