BEML follow-on issue priced at Rs.1,020-1,090


Bangalore : Bharat Earth Movers Ltd (BEML), the state-run diversified enterprise, fixed the price band for its follow-on public issue (FPO) between Rs.1,020 and Rs.1,090, a top company official said here Monday.

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"The board has decided to fix the offer price in the range of Rs.1,020-1,090 for the FPO of 4.9 million shares being offered through a 100 percent book-building process. The issue opens Wednesday and closes for subscription July 3," BEML chairman and managing director V.R.S. Natarajan told reporters here.

The company's shares closed at Rs.1,145 on the Bombay Stock Exchange (BSE) Monday after opening at Rs.1,205, registering a decline of 3.81 percent.

Of the total issue, 490,000 equity shares have been reserved for employees and a net issue of 4.41 million for the public. About 50 percent of the net issue has been earmarked for institutional investors, including mutual funds (five percent) on proportionate basis.

"We propose to raise Rs.4.8-5 billion from the issue in the price band the additional shares are being offered. The issue proceedings will be utilised to partially fund our infrastructure plans, including the expansion of the metro coach manufacturing facility in Bangalore (Rs.2.15 billion) and capital expenditure of Rs.900 million to upgrade the existing facilities," Natarajan said.

In addition to the funds raised through the FPO, the public sector enterprise (PSE) plans to invest Rs.4-4.5 billion from internal accruals towards setting up a 5 mw windmill near Chickmagalur in Karnataka for Rs.270 million, an R&D centre of excellence for metro coaches (Rs.90 million) and a voluntary retirement scheme (Rs.900 million) for its employees.

"We intend to reduce our non-technical and administrative staff strength by 500-600 people in the next couple of years to become a lean-and-mean organisation. The total employees' strength will be retained by hiring more technical and skilled employees, as we plan to go the e-way with our administrative, marketing and allied operations on the ERP (enterprise resource planning) platform," Natarajan pointed out.

The company currently has 11,700 employees. About 500 engineers were hired in the last fiscal. Another 500 technical people will be hired in the current fiscal.

Though the PSE is under the ministry of defence with a 'mini-ratna' status, it has a diversified portfolio of products for mining, construction, railways and metro coaches. It has also decided to offer engineering and design services to third-party vendors in aerospace, defence and civil sector.

In a related development, the company's board has declared a total dividend of 120 percent for the fiscal 2006-07, including an interim payout of 40 percent and a final dividend of 80 percent as against 100 percent for the previous two fiscal years.

The board also approved the audited results for FY 2007, indicating a turnover of Rs.26.01 billion, with a profit-before-tax of Rs.3.16 billion and a net profit of Rs.2.04 billion.