EIL follow-on public offer in July-Sep qtr

State-owned Engineers India Ltd is likely to hit the market with a follow-on public offer for sale of the government's ten per cent equity in the second quarter of the next fiscal.

EIL will finalise audited accounts for 2009-10 fiscal by May or June and thereafter file with the market regulator SEBI for the follow-on public offer (FPO), a source said.

"In all probability, the FPO is likely in the later part of July-September quarter," he said.

At the current market price, the government is expected to raise Rs 1,000 crore through sale of its ten per cent stake in EIL, which provides engineering consultancy services mostly to oil and gas firms.

Before the FPO, EIL will issue a 1,000 per cent (Rs 100 per share) special dividend, the government with 90.4 per cent stake being the biggest beneficiary at Rs 506 crore besides getting a dividend tax of Rs 90 crore.

It will issue two bonus shares for every one held after that and follow it with splitting the Rs 10 share into two.

EIL, which had a cash reserves of Rs 1,320 crore as on March 31, 2009, has till date given Rs 600 crore in dividends to the government on a Rs 25 lakh share capital that formed the company in 1965.

The source said the special dividend and the divestment would give the government about Rs 1,600 crore.

EIL had reported a 67 per cent jump in net profit to Rs 310.65 crore in April-December period of the current fiscal. Turnover had rose 20 per cent to Rs 1,353.46 crore.