New Delhi: The government has appointed law firm Luthra and Luthra as legal advisors for the public offering of state-run consultancy firm Engineers India Ltd (EIL).
It had previously appointed HSBC Holdings Plc, ICICI Securities, SBI Capital Markets and IDFC Capital as merchant bankers to manage the consultancy’s further or follow-on public offering (FPO).
“The financial and legal advisors will now work with the company to prepare a red herring prospectus, which is likely to be filed with market regulator Sebi by mid-June,” a source in the know of the development said.
Sebi approvals may take about a month and the FPO is likely to hit the market in the third or the fourth week of July, he said.
At the current market price, the government is expected to raise about Rs1,100-1,200 crore through sale of 10% stake in EIL, which provides design and engineering services for petroleum, power and fertilizer companies.
EIL, on Thursday, reported a 25.43% rise in consolidated net profit to Rs440.47 crore for the 2009-10 fiscal.
As a prelude to divestment, EIL paid a 1,000% (Rs100 per share) special dividend totaling Rs561.65 crore. Of this, the government, which holds 90.4% equity, got Rs507.65 crore, in addition to a dividend tax of over Rs96 crore.
He said the company will now issue two bonus shares for every one held and subsequently split the Rs10 share into two of Rs5 each. The process would be completed by May-end.
EIL, which had a cash reserve of Rs1,320 crore as on 31 March 2009, has till date given Rs600 crore in dividend to the government on a Rs25 lakh share capital that formed the company in 1965.