With early signs of revival in the infrastructure sector and expected uptick in government spending, the Williamson Magor group owned by the Khaitans and the Toshniwal family have decided not to merge their respective engineering entities, including two listed outfits of the Khaitans and EMC Ltd, an unlisted EPC player in the power sector.
The merger would have created a Rs 7,000-crore engineering combining McNally Bharat Engineering Co, McNally Sayaji Engineering and EMC Ltd with KilBurn Engineering.
"I believe the worst for the infrastructure space is over and the government would start spending money from now onwards. That's why we felt it's better to keep McNally separate. Also, after doing some analysis over the past couple of months, looking at the businesses and the markets, we found that there wasn't much benefit that we are going to get in the long run from the merger process," Aditya Khaitan, vice chairman of Williamson Magor group told DNA Money.
The hope for a revival in the fortunes comes despite McNally continues to suffer operationally.
Its turnover for the September quarter halved to Rs 386 crore and loss doubled to Rs 198 crore.
But a confident owner is now betting on a revival and is putting in Rs 600 crore as promoter fund.
Even its former managing director Srinivash Singh, who left the company in 2010 to head BIL Infra, a company owned by the Binani family, has been brought back.
"McNally, on a standalone basis, would have better prospect in the future in terms of raising equity, etc, and so, instead of merging the two businesses (McNally and EMC) and getting into a bigger issue, we found it to keep McNally on a standalone basis and keep the two companies separate," Khaitan, who also heads McLeod Russel, said.
The decision to infuse capital comes after one of the promoter companies, Williamson Magor & Co, in September raised its stake to 23.26% from 19.51% through conversion of warrants worth 25 lakh equity shares.
Even as the Khaitans got their warrants converted, the other promoter of the company, the Toshniwal family-owned EMC, in July had to pledge part of their holdings for loans.
The Toshniwals were brought in by the Khaitans last year as co-promoters to revive McNally Engineering.
But even that didn't quite help the ailing McNally revive and the two families decide to merge their engineering businesses.
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