Electrosteel Castings, Srikalahasti Pipes boards approve merger

Kolkata: The board of directors of Electrosteel Castings (ECL) and Srikalahasti Pipes (SPL) have approved the proposed scheme of amalgamation of the two companies.

Post merger, the combined entity will become a leading manufacturer of ductile iron pipes. The merged entity will have total DI pipe manufacturing capacity of 8 lakh tonne in India with a market share of 30 %, the company said in a statement.

The proposed amalgamation scheme entails transfer of the entire undertaking of SPL into the company and the dissolution of SPL without winding up. The appointed date for amalgamation under the scheme is October 1.

The merger will be subject to regulatory approvals, including the nod from Sebi, creditors, the stock exchanges, Competition Commission of India, the National Company Law Tribunal under the Companies Act, 2013, the Registrar and the official liquidator.

Srikalahasti shareholders will get 59 equity shares of ECL for every 10 equity shares held in SPL, the company release added. The boards of both the companies considered and approved plans to reorganise the businesses with a view to simplify the group structure and consolidate business

ECL executive director (group finance) and CFO Ashutosh Agarwal said: “The merger will achieve the group objective of consolidating its DI Pipe manufacturing business into a single entity, thereby, creating a platform that will help in pursuing aggressive growth, domestically as well as internationally.”

Agarwal further said, “the combined profitability and cash flow of the merged entity will provide an impetus to our growth and will act as a force multiplier to our efforts of increasing market share. The financial indicators post-merger will support Electrosteel Castings to maintain its credit rating."

Electrosteel Castings closed last fiscal with revenues of Rs 2,480 core while Srikalahasti Pipes clocked a revenue of Rs 1,663 crore.

Baker Tilly India were financial advisors for the scheme and Khaitan & Co. were legal advisors.

Electrosteel Castings has been a leading manufacturer of ductile iron pipes and fittings with nearly five decades of association with water infrastructure solutions for water supply and sewerage systems and supply of pipes. It has facilities in Khardah, Haldia and Bansberia in West Bengal and Elavur in Tamil Nadu.

An associate company of ECL, Srikalahasti Pipes has manufacturing facility in Chittoor district of Andhra Pradesh. The integrated facility has backward and forward integration units in a centralized complex spread across 300 acres.