Kirloskar Oil Engines Ltd will acquire Ahmedabad-based electric pump maker La-Gajjar Machineries (LGM) for an undisclosed amount, as the former looks to achieve a leadership position in the pump segment.
KOEL, a manufacturer of diesel engines, generator sets and pump sets today announced to execute a definitive agreement to acquire 76 per cent stake in LGM at a valuation of 7.89 times EBITDA for the year ending March 2018.
The remaining 24 per cent will be acquired by Kirloskar Oil Engines Ltd (KOEL) over a 5-year period, the company said in a statement.
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LGM, a submersible and mono block pump manufacturer, has brands as 'Varuna' and Raindrop' in its portfolio and would consolidate KOEL's position in the diesel and electric pump segment.
In FY 2016-17, LGM had clocked an annual revenue of around Rs 400 crore.
Commenting on the development, KOEL MD Nihal Kulkarni said: "This acquisition underlines our commitment and focus on fundamentals of energy, water and food."
KOEL Chief Financial and Human Resources Officer T Vinod Kumar said: "This a strategic fit for KOEL and we believe that both organisations complement each other extremely well in more ways than one."
The present LGM management would continue to be involved in the business post acquisition, it added.
KOEL intends to use its wide distribution network to increase sale and achieve leadership in the complete pump segment.
"KOEL intends to use its wide distribution network to increase sale and achieve leadership in the complete pump segment. LGM will add to the portfolio of products in the KOEL Agriculture and Allied Business," it said.
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