Apollo Pipes Ltd, part of the APL Apollo group, has acquired a 53.57% majority stake in Kisan Mouldings Ltd (KML) for ₹118.40 crore, aiming to bolster its position in the PVC pipes and fittings sector.
In an exchange filing on Tuesday, Apollo Pipes said that it secured the stake via a preferential issue of 6,40,00,000 equity shares, priced at ₹18.50 per share with a face value of ₹10 each. This capital infusion has led to Kisan Mouldings becoming a subsidiary of Apollo Pipes.
The company has an enterprise value of ₹260 crore. Singhi Advisors & Financial Services LLP acted as strategic and financial advisors for this transaction.
“The transaction is a strategic and financial fit that will bring significant synergies and market opportunities… KML brings the lengthy experience of almost 35 years in the PVC industry and an extensive range of SKUs (stock keeping units),” Sameer Gupta, chairman and managing director, Apollo Pipes said.
The merger is anticipated to unlock synergistic benefits and support Apollo Pipes’ geographical expansion, especially in the western and central regions of India, by capitalizing on KML’s extensive network to spur further growth.
Gupta expressed optimism about scaling the business rapidly, leveraging Apollo’s strengths in financial management, raw material procurement, and system and process implementations.
Despite challenges like financing working capital, high operating expenses, and inefficiencies in raw material procurement, KML has maintained a revenue of ₹291 crore over the last 12 months. The company operates four plants across a built-up area of 7.34 lakh sq ft but has struggled with inadequate funding for facility upgrades.
KML has a dealer network with over 100 dealers and 10,000 retailers.
As per market estimates, the Indian plastic pipes industry is poised to reach a market size of approximately ₹550 billion by FY26 with the organized market at 65% and the unorganized market at 35%, according to a company statement.
“The pipe industry has grown at ~10% CAGR for the last 10 years and is expected to grow at 12-14% CAGR over the next few years. Robust demand is propelled from tier 1 and tier 2 cities alongside supportive governmental policies, with Apollo poised to harness this growth trajectory,” it added.