The Hindu Business Line : BEML plans to raise Rs 400 cr thru public offer

BHARAT Earth Movers Ltd hopes to raise around Rs 400 crore later this calendar year through a public offering of equity. Its EGM, slated for July 13, is taking up the proposal to issue 72 lakh equity shares of face value Rs 10 each at a premium through book building. The public offer is subject to approval by the Union Government and SEBI after the shareholders give their nod.

Post-public issue, the Union Government's stake would be lower by around 5 per cent. Since its stake dilution in March 1992, the Centre holds 61.23 per cent stake in BEML. The proceeds would be used to expand and diversify into new activities, including contract mining, the CMD of the defence PSU, Mr V.RS. Natarajan, told Business Line.

The EGM will also consider broadening the authorised capital from Rs 60 crore to Rs 100 crore by creating four-crore equity shares of Rs 10 each.

In recent years, BEML has begun to look beyond defence supplies and its traditional earth moving equipment business in which it ranks second in Asia, and exploring forays into emerging areas such as metro rail coaches.

Mr Natarajan said the modernisation programme was on through 2005-06 and 2006-07 to renew or replace old machinery with new CNC machines at its five facilities in Bangalore, Mysore and Kolar Gold Fields. This involved a capital expenditure of Rs 125 crore. This apart, the metro coaches facility in Bangalore would need new material, equipment, hangars and test tracks and broad gauge lines, all of which would need investment of Rs 100-110 crore on infrastructure. BEML has a technology transfer arrangement with South Korea's Rotem and is a prime supplier of coaches for the Delhi metro project.

According to Mr Natarajan, the demand for coaches was expected to touch 1,000 and BEML was expecting a Rs 1,500-crore order for 300 coaches for the Delhi Metro Rail Corporation in a month's time. "We are also looking at (implementing) ERP in our facilities which would cost Rs 15-20 crore," he said.

With sights set on Rs 5,000-crore sales by its 50th year, 2013, BEML was also pursuing a 45:55 joint venture with an unnamed domestic company in the private sector to take up contract mining. Mr Natarajan said it was proposed to invest Rs 25 crore as equity in the joint venture that would focus on untapped coal mining to bridge the supply gap. The order book stood at Rs 2,003 crore at the start of fiscal 2005-06. BEML closed 2004-05 with sales of Rs 1,916 crore and net profit of Rs 172.6 crore.

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