Syrma to join forces with SGS Tekniks to form ₹1,200 cr entity

Gurugram-based electronics design firms Syrma Technology and SGS Tekniks have announced a cash and stock merger to create Syrma SGS. The merged entity will have 4,500 employees and a combined turnover of Rs 1,200 crore. 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, Sandeep Tandon, Managing Director of Syrma said.

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,.

The entity after merging 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 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.

According to Tandon, from a target market perspective as well, the two businesses had varying focuses, which will help the merged entity, 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.