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Bharat Earth Movers , BEML, multi-locational and multi-product manufacturer of mining and construction equipment, is coming out with a follow on public offer, FPO of 49,00,000 equity shares of Rs 10 each through a 100% book-building process, including a reservation for eligible employees of 4,90,000 equity shares. The issue opens on June 27, 2007, and closes for subscription on July 3, 2007.

The price band is between Rs 1020 and Rs 1090 per share.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Apply	BEML is a good issue. Fundamentally, it is a very strong company. Long term investors can apply for the issue. FIIs and mutual funds love this company. The stock can cross Rs 2000 level in the timeframe of 2-3 years. Short term investors like those who want to buy the stock for listing gains, should not apply for the issue.
Manish Bhatt (Prabhudas Lilladher)	Apply	BEML looks to be good issue. People should subscribe to the issue.
SP Tulsian (Investment Advisor)	Apply	The price band of the issue is aggressive at the upper band while acceptable at the lower band. Government of India's stake is at 61%, institutional investors are holding 26% while about 13% is held by public. This means, huge appetite on part of institutional investors. Post price band announcement, price of the share rules at Rs 1145 in the secondary market. If price gets discovered at Rs 1,090 and share price fall by Rs 55, post issue, it could take away the entire gain, likely to accrue to the investors. Any volatile or bearish state of market can bring price to that level, and this fear may not attract safe and secure kind of retail investors. It would have been better if upper band would have been fixed at Rs 1,000. We wish that price gets discovered at Rs 1,020 in the larger interests of retail investors and to improve depth of the capital market.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The issue includes a reservation for eligible employees of 4,90,000 equity shares and a net issue to the public of 44,10,000 equity shares. The issue would constitute 11.77% of the fully diluted post-issue paid-up equity capital of the company.
 
The government currently holds 61.23% in BEML, mutual funds hold 13.89%, financial institutions/banks hold 7.26%, foreign institutional investors hold 7.8%, resident individuals hold 6.11% and corporate bodies hold 2.6%. Post issue, the government' holding in BEML will not be less than 54%.
 
The book running lead manager to the Issue is ICICI Securities Primary Dealership Limited. The equity shares offered through this follow-on public offer, as specified in the RHP, are proposed to be listed on the BSE, NSE and the BgSE.

Objects of the Issue

The issue proceeds will fund the building infrastructure expansion of the metro coach manufacturing facility at Bangalore and other capital expenditure including the upgradation of current facilities. The company also intends to use part of the proceeds to set up a 5MW Wind Mill for captive consumption and an R&D Centre of Excellence for Metro Coaches. The company will also earmark some part of the proceeds towards a voluntary retirement scheme for Employees.

About the company

Bharat Earth Movers is a Public Sector Undertaking (PSU) Mini-Ratna (Category 1) Company under the Ministry of Defence. BEML primarily deals in three product segments comprising Mining and Construction equipments, Defence products and Railway & Metro products through which it caters to vital applications in diverse sectors of the economy such as mining, steel, cement, power, irrigation, construction, road building, defence, railway and Metro transit system.