RPGCOM :: January 2010

corporate report
KEC-RPG CABLES MERGER
Towards greater synergies

The merger of RPG Cables with group transmission major KEC is yet another step in the latter’s journey towards higher growth

Big moves are taking place in the RPG Group’s Transmission Sector. To optimize synergies and achieve the Group’s objective of aggressive growth, RPG Cables is being merged with KEC International. The merger, subject to legal clearances, will be effective from March 1, 2010.

Commenting on the development, Harsh Goenka, Chairman, KEC International Ltd, said: “This merger is a natural extension of KEC’s role in the energy space and a key element in the energy distribution portfolio that KEC is building into its strategy. Besides, there are obvious and distinct synergies which it will provide. The merger will also enhance value for the shareholders of both companies.”

For every 20 shares of RPG Cables, the shareholder will receive one share of the KEC International. KEC will issue 2073068 new shares, thereby increasing its equity capital to Rs. 51.42 crore.

The merger will create clear operational and financial synergies for the merged entity. KEC consumes cable products in its current portfolio of project management businesses like Distribution, Telecom and Railways.

The merger will provide in house capacity for these cable products which will boost these businesses, thereby furthering KEC on the path to becoming an integrated infrastructure project management player.

KEC’s global presence, client network, financial strength and project execution capacity can be leveraged to expand the cables business both in volumes and in geographical reach.

The merger will also enable KEC to achieve cost and operational synergies through rationalization of administrative functions.

The synergies, according to the KEC management, are obvious. Ramesh Chandak, MD & CEO, KEC International Limited said, “Just as our own tower manufacturing capacities have given a thrust to our transmission business, the merger provides us with cable capacities which will support our distribution, telecom and railways business substantially.”

KEC is a global leader in the power transmission project management business. With global operations spanning over 20 countries, the company is present in India, UAE, Libya, Ghana, Algeria, Afghanistan, Nigeria, Kazakhstan, Mali, Oman, South Africa, Kenya, Ethiopia and Egypt among several other countries.

RPG Cables is a leading manufacturer of power and control, telecommunications and instrumentation cables, and offers turnkey cabling solutions involving cable supply, selection, jointing, testing and commissioning with export footprints in various countries.