Zenith Birla (India), a Yash Birla Group Co, announced a follow-on public offer of 2.38 crore equity shares of Rs 10 each at a price of Rs 55 per share, reports The Hindu Business Line.

The company's shares closed on Monday at Rs 64.25 on the BSE.

The proceeds of the issue aggregating to Rs 131 crore (Rs 1.31 billion) will fund a new facility to manufacture mechanical (CDW) tubes primarily for automotive application and also meet its working capital needs. The company currently makes steel pipes and machine tools.

The issue opens on October 16 and closes on October 20.  Net offer to the public is 96.36 lakh equity shares aggregating Rs 53 crore (Rs 530 million). Promoters will buy 45.45 lakh equity shares costing Rs 25 crore.

Employees and directors of the company, existing shareholders and shareholders of group companies will receive 19.27 lakh equity shares each.

NRIs and FIIs will be allotted 19.27 lakh shares and banks/mutual funds/Indian financial institutions will also get same number of shares. The total issue will form 59% of the post-issue paid-up capital of the company.

The new plant at Khopoli in Maharashtra will have an installed capacity of 60,000 tonnes per annum and commercial production is scheduled for December 2007.

"We plan to focus on automotive and oil and gas industry as there is a demand — supply gap in CDW tubes," said Arun Jain, executive director, Zenith Birla.

IDBI Capital Market Services and Keynote Corporate Services are the lead managers to the issue.

The company posted a net profit of Rs 2.93 crore (Rs 29.3 million) for the quarter ended June 2006.