ACE moots Rs 80 crore expansion

Construction equipment manufacturer Action Construction Equipment (ACE) has Rs 80 crore capital expenditure plans.

The company offered a preferential allotment of shares to ICICI Venture and Bennett, Coleman & Co Ltd (BCCL), publisher of the Times of India group, to raise Rs 13 crore from the former and Rs 4 crore from BCCL.

ACE is considering acquisition of a European company, setting a new plant close to the existing one at Faridabad and a research and development (R&D) centre. It is also planning to float a joint venture with an Italian company.

"We have made a preferential allotment of shares to ICICI Venture and BCCL "" 7 per cent equity at Rs 130 per share to ICICI venture and 3 per cent equity to BCCL at Rs 100 per share," said Sorab Agarwal, director, ACE. While ICICI Venture will buy 10 lakh shares, BCCL's kitty will hold four lakh shares.

"As the infrastructure sector is booming, we are soon going to have another manufacturing base in Faridabad. This will help ACE increase its production by at least 100 cranes a month," he said. At the existing capacity the company produces 200 cranes a month.

The new unit, to be spread over a 14-acre area, will involve an investment of Rs 24 crore. The first phase of production will start by July this year and the construction of the entire plant will be completed by March 2007.

ACE will also pump Rs 13 crore into building an R&D centre. Upgrading the existing unit is also on its agenda.

"The acquisition , which will be wrapped up in three months, will entail an investment of Rs 7 crore. Post-buyout, the product branding will be carried out in Europe, while manufacturing will continue to be in India. We are also planning to float a joint venture firm with an Italian company," said Agarwal. The company is toying with the idea to acquire a Chinese construction company, as well.

ACE, which specialises in manufacturing cranes, has also filed the red herring prospectus with the Sebi as it also plans to go public. "We plan to issue 46 lakh equity shares for the public. By May-end we are expecting to hit the market. We will soon get clearance from the BSE and the NSE," he added.

Commenting on the RBI's credit policy Agarwal said, "It will not affect us as we are in the business of hardcore infrastructure".

The size of the construction industry in India is over $25 billion, which accounts for 6 per cent of the country's GDP. The size of the mobile crane market is about 4,000 annually, of which ACE expects to meet at least 50 per cent of the requirement in the current financial year.

The company, which currently has dealers in South Africa, Bangladesh and Qatar, is also making efforts to increase its dealership network abroad.