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Sunday, May 30, 2004

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Corporate - New Projects


Era Constructions plans to raise share capital

Amit Mitra

Mumbai , May 29

ERA Constructions India Ltd has put up on its drawing board a proposal for increasing its share capital by Rs 15 crore to expand and diversify its operations, especially in the textile construction segment.

The company is yet to zero in on the instrument to drum up the additional share capital, which may be in the form of a fresh public offering, a rights issue or even a private placement.

Promoted by Mr H.S. Bharana, the promoters of the company hold about 57 per cent of the share capital, while the balance is held by the public, with the company's shares being listed on the Mumbai, Delhi and Ahmedabad stock exchanges.

At present, 90 per cent of total income of Rs 101.4 crore in 2002-03 had come from constructions for PSUs.

The cumulative order book position as on February end stood at Rs 407 crore, with the major projects at hand being the expansion of the Talcher Super Therman Project for NTPC, construction of ITI building for Delhi, Metro Rail Corporation Ltd.

In the last fiscal, the company expects to notch up an income of Rs 113.8 crore and a net profit of Rs 4.9 crore.

Like other players in the industry, the company also faced strained liquidity due to lack of funds with clients.

Although the problem is likely to continue in the coming months, though on a lesser scale, the company is trying to minimise the risk by assessing the client's ability to fund a construction activity — in fact the company has formed a team for assessing the creditworthiness of a prospective client.

The company has also diversified into other sectors of construction such as those for NPTC, Power Grid Corporation, IOC, NDDB, Railways and Tehri Hydro Development Corporation, part from streamlining its operations.

The company has drawn up plans to increase its turnover from Rs 113.8 crore last fiscal to Rs 156.5 crore in the current fiscal and Rs 225.2 crore by 2006-07. According to a senior company official, the end of the quota regime in January 2005 will lead to tremendous opportunities for growth for companies in the Indian textile sector.

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