Action Construction Equipment Ltd is planning to make a preferential allotment to Reliance Capital that will see the financial services arm of Reliance ADA Group picking around 3.2% stake. Although the firm has not disclosed at what price it will issue the shares, at the last traded price, the company could raise around Rs 21 crore.
The firm that generated revenues of Rs 427 crore with net profit of Rs 17.9 crore for the year ended March’10 gets almost two thirds of its revenue from sale of cranes. The rest of the revenues come from material handling and other construction equipment besides tractors.
The firm that raised around Rs 60 crore through a public issue four years ago has used almost the entire sum for working capital management, new manufacturing plants and acquisitions. It has its production facilities in industrial township of Faridabad.
Early this year Mona Agarwal, part of the promoter group had subscribed to warrants at a price of Rs 41.45 a piece that will eventually lead to inflow of around Rs 21 crore at the time of conversion into equity. The promoter holding already stands at 66% and with the preferential allotment and warant conversion into equity, the promoter holding will remain at the same level. Reliance Capital's stake will accordingly shrink to 3% after the warrants are converted by the promoters.