Andrew Yule: Bank of Baroda loan likely to be converted at ₹24/share

Andrew Yule & Co’s paid-up capital is set to nearly double to ₹125.47 crore after the proposed fresh issue of shares worth ₹29.56 crore to the Government of India and conversion of ₹29.91-crore loans from Bank of Baroda into equity.

Sunil Munshi, CMD of State-owned Andrew Yule, told BusinessLine that the issue to the Centre would be at the face value of ₹2. However, pricing of the shares for conversion of the BoB loan would be based on the SEBI formula. It is expected to be around ₹24 each. Currently, the Andrew Yule stock is trading at around ₹22.

While the cash flow from the share issue to the government would be utilised to fund its capital expenditure plans, mainly for its expansion into the heavy-duty power transformer business, the loan conversion would help reduce its finance cost by ₹2.86 crore a year. The company also has enough room for borrowing as its limit has been raised to ₹300 crore recently.

Meanwhile, Andrew Yule has shelved its proposal for acquiring a brownfield power transformer unit in Tamil Nadu. “Now we are focussing on setting up a greenfield project on 10-acre land at Sriperambudur,” Munshi added. The estimated cost of the Sriperambudur project is ₹150 crore for making 1,200-5,000 mVA transformers. It would get technology support from a Russian company.

The company’s existing transformer unit at Perungudi can produce lower capacity transformers. This division (electrical) of Andrew Yule now has orders worth ₹50 crore. In 2015-16, the division had a turnover of ₹57 crore. “In 2016-17, we target to take the revenue of this division to ₹75 crore,” Munshi said.

Andrew Yule plans to shift the existing unit to Sriperumbudur in phases and the existing five-acre land at Perungudi could be disposed off in future.

The company’s engineering division at Kalyani in West Bengal, which currently produces industrial fans, is likely to manufacture water and air pollution control devices.

“The company, which earlier used to produce these devises, had stopped it due to demand shrinkage. The market for these devices revived recently. With minimal investment of around ₹2 crore, the company hopes to restart production in the later part of this fiscal,” Andrew Yule CMD explained.

In 2015-16, this division contributed about ₹27 crore to the total turnover of the company.

The combined order book of the electrical and engineering divisions now stands at ₹160 crore, up from ₹90 crore around this time last year.