Vadodara-based power transmission equipment maker Diamond Power Infrastructure Limited (DPIL) has signed a memorandum of understanding with Orissa based Utkal Galvanizers Ltd to acquire a 'substantial stake' in the company.
DPIL proposes to pick up a 'substantial stake' in Utkal Galvanizers, informed top company sources. "It would be a substantial stake acquisition in Utkal, not less than the equal share of the promoters," said a DPIL official. Financial details of the deal were not revealed.
DPIL is betting big on the strategic acquisition mainly to benefit from the Utkal's expertise in the extra high voltage lines of 220 KV and 400 KV. The segment is considered as an exclusive club of a few big players in the power transmission equipment. "With the strategic stake in Utkal, DPIL’s foray in transmission and extra high voltage segment will get a boost; and the company would be able to leverage its presence by serving all segments of the T&D industry. The acquisition will further augment Diamond Power’s leadership position in the equipment space for power transmission and distribution with a substantial presence in EPC for power distribution," said Suresh Bhatnagar, chairman, DPIL.
Orissa-based power transmission tower maker is closely associated with the power sector for extra high voltage power transmission, including commissioning of EHV towers, substations and other lattice structures.
Utkal Galvanizers being an approved vendor and an EPC contractor of Power Grid Corporation of India Ltd, the business prospects for DPIL rises after the deal. Utkal presently has an installed capacity of 20,000 metric tonnes per annum.
In a statement issued on Wednesday, K K Mohanty founder and managing director of Utkal Galvanizers Ltd said, "We view Diamond Power as our strategic partner who understands our business and will add significant value to our business. We are confident that with Diamond Power as our strategic partner we will be able to leverage on our expertise and credentials and achieve exponential growth over the next 5 years."
Meanwhile, DPIL officials denied taking over the management control of the company. "We do not want to run the company. It would be a strategic tie-up with Utkal. The company's importance is high due to its current management," said a source. Diamond Power’s order book stands at Rs 1,650 crore as on March 31, 2011. The company expects to close the financial year, 2011 with a turnover of around Rs 1,500 crore, nearly doubling over the last year.
