CK Birla Group's Birlasoft and KPIT will merge to create a $700 million company, which will later demerge into two separate IT entities focused on "digital business IT services" and "automotive engineering and mobility solutions".

A statement released late on Monday said the new "Birlasoft" -- one of the two specialised companies that will be created at the conclusion of the deal -- would be a $500 million digital business IT services company.

It said the new Birlasoft will be created by merging the KPIT ITSS (information technologies solutions and services) business with the current Birlasoft and will be led by Anjan Lahiri as the CEO and MD.

According to the statement, the new "KPIT Technologies" will be a $200 million focused engineering services company that will be created by tapping into the current engineering business of KPIT to create a global leader in automotive engineering and mobility solutions, and will be led by Kishor Patil as the CEO and MD.

"This company will deepen the relationship with global automotive and mobility leaders in fulfilling their engineering needs.

"The company will continue to enhance its expertise in all the features to deliver cleaner, safer and smarter solutions to the world of automotive and mobility," it said.

The statement said during the period prior to the completion of the deal, Birlasoft and KPIT will continue to be run by their current managements, in addition to which management from both the companies will work together to familiarise Birlasoft with the ITSS business.

"With this, Birlasoft will expand its industry leading capability in enterprise solutions with unmatched digital capability.

"We will become the leading 'enterprise digital' company in the country that will advise its customers in unlocking value in their digital journey," said Amita Birla, Chairman of Birlasoft.

Ravi Pandit, Chairman of KPIT, said: "We will be focused on building the KPIT brand as the foremost organisation in the world for automotive engineering and mobility solutions...

"While transitioning the "Business IT services" business to Birlasoft in the next year, our team will continue to work with Birlasoft to ensure the best service to the KPIT Business IT customers."