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McNally Bharat Engineering Co Ltd (MBECL) is preparing to garner around Rs 175 crore through fresh equity issue. A senior company official told Business Line that MBECL intends to complete the fund-raising exercise by the end of this financial year.
“The preparatory work is on”, the official confirmed. The company is seeking equity fund to lower its current finance cost.
In 2013-14, more than 50 per cent rise in finance cost had forced the company to report loss. Despite good order book position, slow or delayed payments prompted the company to depend more on borrowing to meet larger working capital requirement.
In May, the Board of the company in principle had taken the proposal to raise resources. The broad proposal talked about issue of equity or hybrid instruments through follow on offer or rights or private placements. However, preferential issue or private placements could be the possible route, sources indicated.
The promoters BM Khaitan group currently holds upwards of 32 per cent stake in the company. One of the promoter entities, Kilburn Engineering Ltd, in September obtained release of pledge over its 2.73 per cent stake in the company. However, IL&FS Financial Services Ltd still holds pledge over 14.77 per cent promoters’ stake or voting rights in McNally Bharat.
The company sources said in 2014-15, McNally Bharat’s order book position continues to be strong. This month, the company Ltd received an order for construction of water system for NTPC’s upcoming thermal power project at Nabinagar in Bihar for a value of Rs 305.13 crore.
On the execution front, the company is likely to hand over the sinter plant package to Rashtriya Ispat Nigam Ltd next month.
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