Saturday, March 15, 2008

Titagarh Wagons IPO To Open On March 24

MUMBAI: Private sector railway wagon manufacturer, Titagarh Wagon is entering the capital market with its initial public offering of 23,83,768 shares of Rs 10 for cash at a price to be determined through 100 per cent book building process. The issue opens on March 24 and closes March 27. The price band has been fixed between Rs 540 and Rs 610 per share.

The issue comprises fresh issue of 20,68,111 shares and an offer for sale of 3,15,657 equity shares by Rashmi Chowdhary and Strategic Ventures Fund (Mauritius). The issue consists of a net issue of 23,68,768 shares and a reservation of up to 15,000 shares for subscription by eligible employees. The net issue will constitute 12.8 per cent of the post issue capital of the company.

At least 60 per cent of the net issue will be allocated on a proportionate basis to qualified institutional buyer, 5 per cent of the QIB portion will be allocated to mutual funds, and the remaining will be allocated to the QIB bidders including mutual funds. Further, not less than 10 per cent of the net issue will be allocated on a proportionate basis to non-institutional bidders and 30 per cent to retail investors.

The company plans to utilise the proceeds for - a) Setting up an EMU manufacturing facility at Uttarpara unit, b) Modernising and expanding the existing facilities at Titagarh and Uttarpara units, c) Setting up an axle machining and wheelset assembly facility at Uttarpara unit, d) Constructing a corporate office and a design cum research and development office, e) Strategic acquisition or investments, f) Brand building exercise and g) General corporate purposes.

Titagarh Wagons operates two manufacturing facilities located at Titagarh and Uttarpara, in West Bengal. As an “Industry Partner” to the Defence Research and Development Organisation, Ministry of Defence, the company manufactures special purpose wagons, shelters and other engineering equipments.

The company also manufactures and markets special purpose wagons to suit the varying needs of its customers, such as the Merry-Go-Round wagons, special wagons for the Indian Defence establishment. The company has acquired the heavy engineering division of Hyderabad Industries which includes a manufacturing unit at Uttarpara, West Bengal with a steel foundry, fabrication cum machining facility and access to a rail siding.

The order book of the company stands at Rs 753.11 crore with the rolling stock division constituting nearly Rs 669.39 crore as on January 31, 2008. The company is structured along three broad business lines: a) wagon manufacturing division, b) special projects division (includes defence, bailey bridges and other fabricated equipment) and c) heavy earth moving and mining equipment division.

Since fiscal 2003, the company’s total income and profit before tax have grown from Rs 47.17 crore and Rs 4.71 crore respectively to Rs 284.05 crore and Rs 44.80 crore respectively in fiscal 2007, which represents a CAGR of 57 per cent and 76 per cent respectively, during this period. The wagon dispatches of the company have increased from 644 wagons in fiscal 2003 to 2,073 wagons in fiscal 2007.

The stock will be listed on the Bombay Stock Exchange and National Stock Exchange of India.

The lead manager to the issue is Kotak Mahindra Capital and the co-book running lead manager is JM Financial Consultants.

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