Electronics co Syrma to merge with SGS Tekniks to create Rs 1,200-cr entity

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November 11, 2020 1:29 PM

Over 80 per cent of the merger to form the new company Syrma SGS is through the stock and the rest is through an undisclosed amount of cash payout to the promoters of SGS Tekniks by Syrma, Sandeep Tandon, managing director of Syrma, told PTI.

Promoters of the 2005-incorporated Syrma will be holding 57 per cent in the merged entity, those who founded SGS 30 years ago will have 35 per cent, while the rest will be with the PE fund, he said. (Representational image)

Electronics design firms Syrma Technology and SGS Tekniks on Tuesday announced a cash and stock merger to create a new entity, which will have a revenue of Rs 1,200 crore. Over 80 per cent of the merger to form the new company Syrma SGS is through the stock and the rest is through an undisclosed amount of cash payout to the promoters of SGS Tekniks by Syrma, Sandeep Tandon, managing director of Syrma, told PTI.

Syrma has also received an investment from GEF with the intent of being a shareholder in the merged entity, he said without disclosing the financial details. Promoters of the 2005-incorporated Syrma will be holding 57 per cent in the merged entity, those who founded SGS 30 years ago will have 35 per cent, while the rest will be with the PE fund, he said.

The merged entity will have 4,500 employees and a combined turnover of Rs 1,200 crore, he said, adding that both the managements will work together and the synergies will help up the revenue growth to 30 per cent per annum from the present 20 per cent.

At present, the management teams are working out of Chennai (where Syrma is headquartered) and Gurugram, and the overall integration will take up to nine months, Tandon said. Tandon said this is a merger of equals, where the size of the business was almost the same, and none of the two businesses was carrying any debt. Both the businesses are very complementary as well, with factories at separate locations and different clients being served.

From a target market perspective as well, the two businesses had varying focuses, which will help the merged entity, he said, pointing out that Syrma derived 85 per cent of its revenue from foreign markets, while SGS had 85 per cent from the local market.

The merged entity will derive 50 per cent of its revenue from industrial vertical, 18 per cent from medical, 16 per cent from auto and 15 per cent from consumer electronics, he said, adding plans are afoot to up the focus on internet of things and defence equipment verticals as well.

It will have three design centres, including one in Stuttgart, Germany and two local ones. It will have eight manufacturing facilities at places like Gurugram, Manesar, Bawal, Baddi, Bangalore, Chennai and Bargur. “We have the utmost respect for Syrma business and its employees, and greatly look forward to working together as we integrate the two companies,” SGS founder and chairman J S Gujral was quoted as saying in a statement.

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