Under the transaction, Apollo has secured its position through preferential issue allotment of 6.40 crore equity shares, at an issue price of Rs 18.50 per share, having face value of Rs. 10 each. Total investment for this strategic acquisition is Rs 118.40 crore.
'This strategic investment marks a pivotal moment for both Apollo and KML, showcasing a convergence of industry giants poised to redefine standards and drive unparalleled growth,” the company said in a statement.
KML brings an extensive range of high quality products, encompassing wide range of SKU’s including Plastic Pipes and fittings for building and agricultural purposes and cost–effective PVC products, available in various designs, colors, and functionalities, to cater to diverse preferences and purposes. There is a wide dealer network with over 100 dealers and 10,000 retailers under KML.
Apollo's stated that this acquisition aligns with the company’s strategy to fortify its foothold as a premier manufacturer in the Plastic Pipe Industry within India.
By integrating KML into its portfolio, Apollo aims to expand its legacy while unlocking synergistic benefits that promise greater market penetration and entry into new end-user segments.
Additionally, the acquisition will facilitate Apollo's geographical expansion, particularly in the Western and Central regions, further leveraging the esteemed “KML” network for accelerated growth.
As per market estimates, the Indian Plastic Pipes Industry poised to reach a staggering market size of approximately Rs 55,000 crore by FY 2026E with the organized market at nearly 65% and unorganized market at approximately 35%.
The domestic plastic pipes industry growth is pegged on the back of government's push on cleanliness and sanitation, building affordable houses, replacement and substitution demand. The demand is led by higher investments in Water supply & sanitation projects, substitution of metal pipes with polymer pipes and replacement demand.
Sameer Gupta, chairman & managing director, Apollo Pipes said, “We are excited to announce that we have acquired majority stake in KML to bring a strong West Indian brand under Apollo Umbrella. The transaction is a strategic and financial fit that will bring significant synergies and market opportunities.
We continue to make strong inroads across cPVC, HDPE pipe and value-added product segment. KML brings lengthy experience of almost 35 years in the PVC industry and an extensive range of SKU’s including Plastic Pipes & fittings for building and agricultural purposes and cost–effective PVC products, available in various designs, colors, and functionalities, to cater to diverse preferences and purposes.
We take note of the fact that KML generated revenue of Rs. 291 crores on TTM basis despite issues such as: 1) working capital finance, 2) lack of funds to modernize its plants and, 3) high operating costs and raw material procurement inefficiencies. We believe the existing management has done a commendable job to achieve these financials with such headwinds. The business can be scaled up to new heights quickly with Apollo’s strength in financial management, raw material procurement and implementation of various systems and processes.”
Apollo Pipes is among the top 10 leading piping solution providing company in India. With more than 3 decades of experience in the Indian Pipe Market, the company holds a strong reputation for high quality products and an extensive distribution network.
The company had reported 86.83% jump in net profit to Rs 9.08 crore despite a 6.39% fall in sales to Rs 221.56 crore in Q3 FY24 over Q3 FY23.