BEML to buy mining equipment plant

State-owned construction equipment company Bharat Earth Movers (BEML) is all set to buy a government-owned mining equipment plant for about Rs 100 crore.

The acquisition will come close on the heels of BEML's another possible equity buy-out of Companhia Comercio E Construcoes (CCC), the company's Brazillian partner, also for Rs 100 crore.

BEML has a joint venture agreement with CCC for manufacture and supply of rail wagons and bogies, mining and construction equipment for the Brazilian market.

BEML plans to make the government's defunct plant operational once it gets court approval before the financial year-end.

"We would have acquired the plant lot cheaper had it not been defunct. We will carry out refurbishment and upgradation activities within the plant. We need to add equipment before manufacturing begins. The total cost of additions will be assessed only after we bring the plant under our possession," a BEML official said.

The company intends to fund the buy-out as well as the Brazillian acquisition through the proceeds of its follow-on public offer (FPO) and partly by internal accruals. The company raised close to Rs 495 crore through the FPO which came out in June this year.

In all, the company will raise Rs 900 crore to be utilised for acquisitions in mining and construction, modernisation of plants, windmills and for providing the voluntary retirement scheme (VRS) option to employees.

BEML is Asia's second largest mining and construction (M&C) equipment supplier with a 70 per cent share in the domestic market.

The company is expecting a compounded annual growth rate of 17-18 per cent in the next five years with a 30 per cent growth in the top line for the next five to ten years.