The Hindu Business Line : BEML plans Rs 440-cr follow-on issue in June

EXPANSION PLANS: Mr V.R.S. Natarajan (left), Chairman and Managing Director, BEML, and Mr B.L. Bajaj, Director (finance), at a press conference in Bangalore on Monday. - G.R.N. Somashekar

Bangalore April 2 Bharat Earth Movers Ltd has slated its public issue - to raise Rs 440 crore by offloading 49 lakh shares - for the first half of June this year.

The follow-on issue will mainly finance the modernisation and expansion plans of its metro coach production infrastructure at Bangalore, Mr V.R.S. Natarajan, Chairman and Managing Director of the defence public enterprise, told a news conference here on Monday. Internal accruals would partly fund the expansion - Rs 230 crore for metro infrastructure and Rs 150 crore for modern machinery.

The plan is to raise the output to around 300 coaches a year to meet the estimated demand for 1,000 coaches in a couple of years as many States have announced metro projects. Metro and rail coach business is around 10-15 per cent of the turnover; mining and construction equipment around 55 per cent; and 35-40 per cent is from defence orders. Currently, the Government of India holds 61.23 per cent of the shares in BEML; UTI, banks and FIs hold 23.12 per cent; and non-institutional investors 15.65 per cent. The BEML scrip closed Rs 21.5 lower at Rs 1,061 in a day of falling indices.

Salex tax reprieve

The Karnataka Government's five-year sales tax exemption for metro coaches would give it a competitive edge in bidding for the Delhi metro and other projects, Mr Natarajan said. DMRC alone has placed a bid for 312 coaches.

Part of the issue proceeds will also foot the VRS bill of Rs 90 crore to cover 1,000-1,200 unskilled workers over the next five years.

Currently, around 100 employees are opting to exit each year and this number may rise.

BEML is strengthening and retaining its engineering pool and hiring 200-300 diploma and graduate engineers a year. "Now that we have gone in for ERP, the dependence on clerical staff will come down," Mr Natarajan said.

A Rs 25-crore captive wind energy project is being planned at Chitradurga through a turnkey contract with Suzlon.

Profits up 10%

BEML closed the just ended 2006-07 year with a provisional profit before tax of Rs 315 crore, or 10 per cent growth year on year. Provisional turnover was up 18 per cent recording its highest ever figure of Rs 2,600 crore. Exports were Rs 110.05 crore. The larger plan is to touch Rs 5,000 crore by 2013, its 50th year.

For the current year, Mr Natarajan said the company had a sales target of Rs 3,200 crore and exports of Rs 125 crore.

The order book of Rs 1,617 crore was likely to swell to Rs 2,300 crore as more orders are coming, he said.

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