"The Board has approved a draft composite scheme for amalgamation of Birlasoft (India) Ltd with the company and demerger of the engineering business of the company into KPIT Engineering Ltd, a wholly owned subsidiary of the company," it said in a regulatory filing.
As per the proposed merger, shareholders of Birlasoft will receive 22 equity shares of the combined KPIT-Birlasoft for every nine equity shares of Birlasoft.
The combined KPIT-Birlasoft entity will be engaged in the IT business.
"While transitioning the 'Business IT Services' business to Birlasoft in the next year, our team will continue to work with Birlasoft to ensure the best service to the KPIT Business IT customers," KPIT Chairman Ravi Pandit said.
The shares of KPIL Engineering Ltd (KEL) will be listed pursuant to the proposed demerger and the shareholders of combined KPIT-Birlasoft will receive one share of KEL for every one share they hold in the combined firm, it said further.
"After the proposed demerger, the existing promoters of the company propose to acquire sole control and substantial shareholding in KEL from the Birlasoft promoters," KPIT Technologies said.
KPIT Technologies provides IT consulting and product engineering solutions to areas like automotive and transportation, consumer and industrial goods.
Part of the old CK Birla Group, Birlasoft provides information technology (IT) services across various verticals.
Shares of KPIT Technologies closed 0.99 per cent down at Rs 209.25 on BSE.