Elecon promoters to pare 6% stake

The promoters of Elecon Engineering will reduce their stake by 6 per cent to about 40 per cent on maturity of foreign currency convertible bonds (FCCBs) by end of this calendar year.

The company had agreed to issue FCCBs of $18 million in two equal trenches. Of this, it has issued 9,000, 0.5 per cent FCCBs of $1,000 each. Till now, bonds to the value of $8 million have been converted into 4.82 lakh equity shares of Rs 10 each fully paid-up.

"The remaining FCCBs (in the first trenche) and bonds of the second trenche shall be converted by the end of this calendar. Once fully converted the promoters' stake in the company should go down by 6 per cent," said Prayasvin Patel, managing director.

Elecon will utilise the money raised for expansion and acquisitions. Elecon is a dominant player in industrial gears, controlling a market share of 31 per cent. It is also a major manufacturer of material handling equipment.

The company is aggressively looking at expansions and acquisition overseas in the areas of gears and material handling equipment. "By 2009, 30 per cent of the company's revenues should come from exports," said Patel.

Elecon has an unexecuted order book of about Rs 626 crore as on end of May 2006.

The company has on hand major orders from Bhel, Tecpro System, Reliance Energy and Torrent Power, Ahmedabad aggregating Rs 143.9 crore.