NEW DELHI: Zenith Birla Limited on Wednesday announced that the company is setting up a mechanical tube plant near Khopoli and will hit the capital market on October 16 with its public offer of shares to raise about Rs. 131 crore to fund the project and meet other related financial requirements.

The Yash Birla group company, which is engaged in the manufacture of steel pipes and machine tools, is offering 2.38 crore shares at a price of Rs. 55 per share.

At a media meet, Zenith Birla Executive Director, Arun Jain, said, "The company has come out with the follow-on public offer to set up a mechanical tube plant to basically cater to the needs of automobile manufacturers."

According to him, the promoters will subscribe to 45.45 lakh shares out of the total issue at a price of Rs. 62 per share. Securities and Exchange Board of India (SEBI) norms permit a promoter to subscribe to fresh share issue by taking the six-months average of the company's stock price or the average of the last 15-days' trading prices.

After reservations for employees, shareholders, directors, shareholders of group companies, FIIs, NRIs, banks, mutual funds and financial institutions, the net offering to the public is 96.36 lakh shares.

Out of the Rs. 131 crore to be raised, Rs. 97 crore will be spent on setting up the plant and the balance will be utilised as working capital. The mechanical tubes plant will start functioning from November next year.

At present, the company has three plants at Khopoli, Aurangabad and Nashik.

Zenith Birla earns half of its annual revenue (total Rs. 320 crore) from the overseas market, mainly the U.S. and Middle East.

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