Chennai-based BGR Energy Systems Ltd, a heavy electrical equipment maker, is hitting the road for raising around Rs 350 crore by diluting 5-6% stake. The company's road shows are already underway as it looks to support its capex and possibly bring down promoter stake to 75%, which will also meet the upcoming requirement of 25% minimum
float, sources tracking the development said.
The Rs 3,000-crore company may look at issuing preferential shares, or could explore stake sale by promoter, as it talks to a clutch of foreign institutional investors for fundraising. One source said, the company was exploring stake dilution at a slight premium to the current trading price. The stock was quoting at Rs 747.50 on BSE, up 0.44%, at
the time of posting this report. This gives it a mcap of Rs 5,385 crore. The counter saw 52-week high of Rs 780.
An email sent to the company and calls made to the spokesperson did not elicit any response at the time of posting this report. On Tuesday, a BGR Energy spokesperson said that the news of stake sale is highly speculative and imaginary.
Edelweiss is believed to be advising the ongoing process for BGR Energy. The promoter holding at BGR is pegged at 81.31%, according to the latest stock exchange filings. Listed firms have time till March next year to decide on facilitating 25% minimum float or to go for de-listing. BGR might be opting for diluting promoter stake straight away as the stock has run up well over 50% since April this year.
Citigroup Venture Capital International-backed BGR recently reported an increase in consolidated total income to Rs 3,077.93 crore in FY10 from Rs 1,935.45 crore last year. Net profit grew by 74.32% to Rs 201.45 crore in the year ended March 31, 2010.
Further, the company is seen finalizing joint venture with Japan's Hitachi for super-critical boilers and turbines, planning a total installed capacity of 4,000 MW, in 660-1000 MW rating. This involves capital expansion of Rs 3,000 - 3,200 crore, as it has identified land
for the new manufacturing plant near Chennai. It plans to spend Rs 1,000 crore on boiler facility and the rest on turbine generator unit.
The fresh capital raising must be viewed in this context as well, sources added, as the company is sitting on Rs 933 crore debt. The current debt to equity ratio stands at 1.3 as of March end, 2010.
VCCircle reported last month that a Hitachi arm is likely to pick up a stake in the Indian joint venture with BGR in the power plant equipment space. The deal may help BGR gain from Hitachi’s technical knowhow while the latter will get a direct presence in India. BGR,
which currently imports boiler, turbine, generator (BTG), will now be able to manufacture these in India.
The ventures are expected to be in the areas of turbines and boilers. The development comes as BGR Energy's subsidiaries, BGR Boiler Pvt. Ltd and BGR Turbines Pvt Ltd, entered into technical collaboration with Hitachi in April this year.
BGR now also plans to go after NTPC tenders after signing the JV with Hitachi. For the current fiscal, BGR Energy is learnt to be expecting Rs 15,000 crore of order inflows.