Date:09/08/2005 URL: http://www.thehindubusinessline.com/2005/08/09/stories/2005080901980200.htm

Back BEML to come out with public issue

Our Bureau

Mr Natarajan V.R.S. (left), Chairman & Managing Director, Bharat Earth Movers Ltd, and Mr P. Mazumdar, Director (Finance), at a press conference in Mumbai on Monday. — Paul Noronha

Mumbai , Aug. 8

BHARAT Earth Movers Ltd (BEML) intends to tap the capital market in September to part finance its proposed investment plans.

The company needs to invest around Rs 500 crore over the next 4-5 years. A part of that would be met through the public issue, which is awaiting Government approval, Mr V.R.S. Natarajan, Chairman and Managing Director, BEML, said at a press briefing here on Monday. The remaining funds needed will be met from internal accruals.

The issue involving 70 lakh shares will be of Rs 400-500-crore. Ten per cent of it will be reserved for existing shareholders, another 10 per cent for BEML employees.

Currently, the Government owns a 61.2 per cent stake; financial institutions and the public have 38.8 per cent. After the issue, the Government's stake will come down to 54-55 per cent on the expanded equity base.

"There is no dilution by the Government, it will continue to hold what it has," he said. The company's equity base is Rs 36.87 crore at present. "That is very low," Mr P. Mazumdar, Director (Finance), said.

A debt-free enterprise, BEML hopes to have a turnover of Rs 2,200 crore in 2005-2006. It had a turnover of Rs 1,862 crore with a profit after tax of Rs 172.6 crore in 2004-2005.

Its vision is to touch a turnover of Rs 5,000 crore by 2013-2014; Rs 2,500 crore of that coming from mining and construction, Rs 1,500 crore from the Railways (including metro railways) and Rs 1,000 crore from servicing the defence sector.

A one-stop shop for a variety of products in the earthmoving and mining areas, the Railways and defence (revenues at present are distributed in the ratio of 60 per cent, 10 per cent and 30 per cent respectively across these customer groups), BEML wants to both expand and diversify. Plans include equipment for metro railway operations, underground mining, contract mining, trading and engineering software and consulting.

Mr Natarajan was particularly bullish on the metro railway segment. Estimates show a potential Rs 6,000-crore business from the segment over the next five years.

In contract mining, BEML is talking to mine developers for joint ventures.

"These tie-ups could be specific to each coal block bid for," Mr N. K. Srinivasan, Director (Marketing), said.

The company's interest will be in greenfield mining projects.