CG Power and Industrial Solutions Ltd. agreed to acquire a 55% stake in G.G. Tronics India Private Ltd. for 319.38 crore rupees ($38 million) in cash to expand its railway product portfolio.

The company signed definitive agreements on 24 July to acquire a 55% stake in Bengaluru-based G.G. Tronics through a combination of purchase of equity shares from its promoters and subscription to compulsorily convertible preference shares, the engineering conglomerate said in a stock exchange announcement.

G.G. Tronics, established in 2003, specializes in designing, manufacturing, supplying, and installing electronic safety embedded signaling systems for the railway transportation segment.

The company offers the Train Collision Avoidance System (TCAS), also referred to as Automatic Train Protection Systems (IRATPS) or 'KAVACH,' for which G.G. Tronics is a developmental vendor.

G.G. Tronics is currently in the advanced stage of getting an approval for the latest version of KAVACH along with long-term evolution compatibility from the Indian Railways’ Research Designs and Standards Organisation (RDSO).

DEAL RATIONALE

CG Power, a part of Murugappa Group, said the stake acquisition is in line with the company’s strategy to expand its railway product portfolio by diversifying into closely related or adjacent areas poised for growth.

“This is a crucial step forward for CG in further consolidating our position in the Railway Industry,” according to CG Power Managing Director Natarajan Srinivasan, who retired from the company at the close of business hours on 24 July.

CG Power, which is now led by Amar Kaul, said the acquisition is likely to be completed by 23 August and the integration is expected to leverage synergies between both the companies.

The company said its expertise in manufacturing, engineering, and project management, complemented by G.G. Tronics’ specialized knowledge in railway transport safety and embedded systems will enable CG Power to actively pursue ‘KAVACH’ and other rail safety projects in the areas of electronic signaling sector.

G.G. Tronics reported a turnover of 98.13 crore rupees in FY23, up from 75.28 crore rupees a year earlier, according to the statement.

Note: $1 = 83.7226 Indian rupees

(Send feedback to editor@cornerofficejournal.com)

India Watch List For Tuesday - January 16