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Wednesday, December 27, 2006

Shapoorji Pallonji readies IPO for arm

The skylines of cities worldwide are dotted with constructions of Shapoorji Pallonji Group, be it the cricket stadium in Guyana for the 2007 World Cup or the Barakhamba underground station in New Delhi. The group, best known for being the single largest private shareholder in Tata Sons with an 18.5% stake, is quietly preparing to take one of its group company — Afcons Infrastructure — public. If it does, it would be the first time that the low-profile group would be inviting investors to acquire a share in its company, reports The Times of India.

Forbes Gokak is the only group company whose shares are publicly traded, but the diversified textiles-to-consumer durables firm was already listed when group patriarch Pallonji Shapoorji Mistry bought it from the Tatas.

A source said Afcons (formerly known as Asia Foundation & Construction Company) has appointed Enam Financial Consultants as an advisor to the transaction. The company may offer shares to the public in the first quarter of 2007. Like its chairman Pallonji Shapoorji Mistry, the fifth richest Indian, the group too has always maintained a low profile and its business ventures have stayed private.

Afcons, with a turnover of Rs 700 crore, undertakes large civil engineering projects in India and abroad focussing on jetties, docks, harbours, roads, bridges and special foundations. The group holds 98% stake in Afcons and the balance 2% is held by employees. Afcons became a part of the SP group in 2000 following the acquisition of ICICI Bank's 30% stake. It later hiked its stake in the company by buying out the employees' holdings.

In the 90s, Afcons was not in the best of financial health as a general economic slowdown and capital shortage hit its businesses. The company underwent a debt restructuring with ICICI Bank converting its debt into equity. With the Shapoorji Pallonji group coming into the picture, Afcons' revenue has surged. Its turnover and net worth has increased from Rs 295 crore and Rs 115 crore in 1999-2000 to Rs 549 crore and Rs 191 crore in 2004-05, respectively.

In a couple of years, Afcons may surpass group flagship Shapoorji Pallonji & Company in terms of revenues, thanks to its bulging Rs 3,000 crore order-book.

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