Mumbai, Oct. 30: RPG Cables is being folded into group company KEC International.

Under the share swap terms of the merger, shareholders of RPG Cables will receive one share of KEC for every 20 shares held. KEC will issue a little over 20.73 lakh shares, raising its equity capital to Rs 51.42 crore. The boards of directors of the two companies today approved the merger proposal that will come into effect from March 1 next year. The RPG group expects to derive operational and financial synergies from this merger.

KEC consumes cable products for its project management business like distribution, telecom and railways. The merger will thus provide in-house capacity for these cable products, enabling KEC to become an integrated infrastructure project management company. “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,” KEC International chairman Harsh Goenka said.

“The merger will also enhance value for shareholders of both companies.”

RPG Cables makes power and control cables, jelly-filled telephone cables, optical fibre cables and housewiring cables.

For the year ended March 31, 2009, it posted net sales of Rs 385.06 crore.

KEC International is engaged in power transmission project business. It posted a turnover of Rs 3428 crore in 2008-09.

Meanwhile, KEC also declared its results for the second quarter ended September 30. The company posted a nearly 135 per cent growth in net profits to Rs 42.09 crore as compared with Rs 17.94 crore in the same period last year.

Net sales rose to Rs 875.11 crore from Rs 806.70 crore a year ago.

The company has orders worth Rs 5543 crore on its books. Almost 57 per cent of these orders come from the South Asian market.