Electrosteel Castings May Offer 1:1 Bonus Issue

Electrosteel Castings, the country's largest cast iron pipe maker, is likely to offer 1:1 bonus to the shareholders for the financial year 1999-2000.

The board of the cash-rich company, which has a reserve of Rs 166 crore and expects to generate another Rs 240 crore in next three years, will take a formal decision on bonus issue and will also adopt the financial results for the last year at a meeting on May 12. "The bonus issue is expected to be 1:1 as the company is financially strong enough to service equity capital of another Rs 8.07 crore in addition to the existing same figure. Secondly, the management does not want to impose trouble on the shareholders by offering bonus ratios which would lead them to the difficulty of holding fractional stocks," a highly-placed official said.

 

The Kejriwals-controlled Electrosteel Castings had come out with an 1:1 bonus offer in 1989 when the company's equity capital was pegged at a meager Rs 8 lakh. The company also introduced rights offer which, along with the bonus issue, raised the equity capital to the present level of Rs 8.07 crore.

It is estimated that the company's turnover would reach around Rs 523 crore for the period ended March, 2000 and the net profit would go up over Rs 88 crore. If it happens, the company's growth_ in turnover and profitability_will be remarkable over the past five years.

In 1994-95, turnover and net profit was Rs 102.23 crore and Rs 5.64 crore respectively.

The good performance has led the scrip to a remarkable growth_from Rs 80 in 1994 to Rs 1405 in 1999. Currently, the scrip has been hovering around Rs 243 on the bourses.

The company, which has declared a whopping 150 per cent dividend for last year (as against the previous year's 125 per cent) would end up the year with a surplus reserve of over Rs 70 crore.

Banking on a steady growth, the company has started implementing a massive Rs 235 crore expansion plan to set up unit in Maharashtra, expansion of existing capacity of plants in Calcutta and Madras by 2002.

The expansion plan aims at increasing the production capacity of ductile iron pipe from the earlier level of 90,000 tonne per annum to 2 lakh tonne a year at the Calcutta unit and double the cast iron pipe manufacturing ability to 1.5 lakh tonne a year at the Madras unit.