We are looking at strong margin expansion post-merger with 5 percent rise in EBITDA per tonne, said Anubhav Gupta, chief strategy officer of APL Apollo Tubes, on Tuesday.

Shares of APL Apollo Tubes and Apollo Tricoat Tubes rallied in Monday’s trade after their boards approved the merger of Shri Lakshmi Metal Udyog and Apollo Tricoat Tubes with APL Apollo Tubes. Apollo Tricoat Tubes' minority shareholders will receive one equity share in APL Apollo Tubes for each equity share held in Apollo Tricoat.

Speaking in an interview to CNBC-TV18, Gupta said, “We see various synergies post the merge between two companies. One is at the cost level, second is at the product level and third is at the brand level. So all these three scenarios put together, we are looking for a good margin expansion with overall consolidated merged entity and this could lift the EBITDA by at least 5 percent.”

However, said Gupta, we will see a reduction in distribution costs post-merger.

“We have drawn the plan on three areas - at the plant consolidation level, at the distribution cost and to go to market cost. The plant cost the overall group has around 10 plants which are divided between Apollo 8 and Tricoat 2. We think there could be some cost efficiency if we are able to consolidate some of the capacity there. At the distribution cost, since 50-60 percent of the distributors are common for both APL Apollo and Apollo Tricoat. So reaching out to the distributor should also save some cost,” he said.

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(Edited by : Aditi Gautam)