FPO season... now its turn of BEML !

Bharat Earth Movers, BEML is eyeing over Rs 430 crore from the follow-on public issue which opens on June 27. The state-owned company will offer 49 lakh equity shares of Rs 10 each through a 100% book built offering, the price band for which is expected to be announced at the start of next week. The issue closes on July 3.

Of the total issue less 10% reserved for employees, 35% has been reserved for retail investors and 15% allocated for non-institutional. Qualified institutional buyers have a lion's share in the issue at 50%, of which 5% is for mutual funds. The issue constitutes 11.77% of the fully diluted post issue paid-up capital.

ICICI Securities is the book running lead manager to the issue.

The company plans to fund its expansion and capital expenditure from the issue. Of the proceeds, Rs 214.51 crore will go towards expansion of the Metro coach manufacturing facility at Bangalore, and Rs 90 crore on capital expenditure, including upgradation of current facilities.

The voluntary retirement scheme for employees would use up another Rs 90 crore of the proceeds. The company also plans 5MW windmill for captive consumption at a cost of Rs 27 crore and a R&D centre for Metro coaches at an investment of Rs 9 crore.

Any shortfall in funds for the said objectives would be met through internal accruals.

The government currently holds 61.23% in Bharat Earth. Mutual funds hold 13.89%, financial institutions/banks hold 7.26%, foreign institutional investors hold 7.8%, resident individuals hold 6.11% and corporate bodies hold 2.6%.

Post issue, the government's holding in the company will fall to 54.03%.

Bharat Earth is the second largest manufacturer of earthmoving equipments in Asia, and commands 70% market share in domestic industry. The company has a diversified portfolio of products catering to defence equipment, railways, mining, steel, cement, power, irrigation, construction and road building.

The ministry of defence is Bharat Earth's largest customer. The company's other customers are Indian Railways, Delhi Metro Rail Corporation and other metro rail transit agencies.

As on Feb 28, 2007, Bharat Earth's order book stood at Rs 1,200.74 crore. Of this, Rs 236 crore was from the defence business. The company also had orders from the New Delhi Railway Board worth Rs 102.96 crore.

What's interesting is the company will detail its results for the year ended Mar 31, 2007 on June 25, just two days before the issue opens, reports The Economic Times.

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