BEML close to Brazilian firm acquisition

The state-owned construction equipment company Bharat Earth Movers (BEML) is looking for 100 per cent buyout of Companhia Comercio E Construcoes (CCC) based in Brazil for a total consideration in excess of Rs 100 crore.

The company is expecting the take-over process to be complete by next year. The Indian giant, which is the second largest mining and construction (M&C) equipment supplier in Asia, currently has a joint venture agreement with CCC for manufacture and supply of rail wagons and bogies, mining and construction equipment and spares for the Brazilian market.

M Poonavaranam, director (mining and construction), BEML, said, "We are in the process of acquiring the residual stake in our JV partner CCC. The transaction would be complete within a year"

The M&C industry in the Latin American region is growing rapidly due to the heavy concentration of firms like CVRD which is engaged in iron ore mining. The region has seen faster growth in that sector due to the country's surging industrial growth.

BEML will acquire all the assets of CCC, which includes an assembly unit and would cater to companies like CVRD. BEML has already registered itself in the state of Vitoria as a legal entity.

The company today also announced its follow-on public offer plan for raising Rs 450 crore, to be utilised in sectors like M&C, modernisation of existing plants, windmills and also for providing the VRS option to its employees. A total of Rs 900 crore will be raised through the public issue and internal accruals.

The price band of the public issue will be decided on June 25 with a subsequent issue of 49,00,000 equity shares of Rs 10 each, with 10 per cent (4,90,000 shares) reserved for its employees. The issue will open on June 27 and close on July 3.

The issue would constitute 11.77 per cent of the fully diluted post-issue paid-up equity capital of the company. The government will hold 51 per cent in the company after the issue.

The company is expecting a CAGR of 17-18 per cent in the next five years with a 30 per cent growth in the top line for the next 5-10 years.