Somi Conveyor Beltings Limited is a manufacturer of Rubber Conveyor Belts of various sizes used for industrial applications of material handling in various industries such as coal, lignite, iron ore, mining, cement, power, steel, fertilizer and sugar etc. The Company has also recently introduced food grade belts for tea gardens and salt industries. The Company proposes to enter the Capital markets on 24th June, 2008 with an Issue of 62,27,860 Equity shares of Rs 10 each at a fixed price of Rs 35 (including a premium of Rs 25 per equity share) aggregating to Rs 2179.75 Lakhs.

The Issue comprises a contribution by promoters of 14,99,286 Equity shares of Rs 10 each at a price of Rs 35 per equity shares aggregating to Rs 524.75 lakhs. This leaves a net issue to the public of 47,28,574 Equity shares aggregating to Rs 1655 lakhs, including an allocation of at least 10% of the net public issue to QIBs. The net issue to the public would constitute 40% of the fully diluted post issue paid up capital of the company. The Issue closes on 27th June 2008. Ashika Capital Limited is the Lead Manager to the Issue.

The Company proposes to utilize the net proceeds of the issue to part finance its Rs 3509 lakh project cost. The expansion and modernization project consists of setting up of new manufacturing unit, purchase of land and building for office use, meeting margin money requirement for enhanced working capital and meet the interest cost during the construction period. The project is proposed to be funded through promoters contribution of Rs 1004 lakhs, IPO proceeds of Rs 1655 lakhs and term loan from Punjab National Bank of Rs 850 lakhs.

The Company, earning profits since last 5 years, had commenced production with an initial capacity of 36,000 MPA and it has expanded to present operating capacity of 1,67,660 MPA. Depending upon the width of the rubber conveyor belt the capacity utilization can be stretched up to 2,00,000 MPA. Considering the potential for growth, it intends to raise production capacity to 4,00,000 MPA and also enlarge the belt width from the current 1200mm to 2000mm.

Somi is setting up new factory unit with an installed capacity of 1,72,080 MPA for manufacturing rubber conveyer belts of 2000 mm width at Village Tanawara, Jodhpur, Rajasthan. The capacity can be stretched up to 2,00,000 MPA. The Project has been appraised by Punjab National Bank, Technical Cell, New Delhi and the Bank has sanctioned loans of Rs 850 Lakhs. Out of the sanctioned limit, an amount of Rs. 804.68 Lakhs has already been disbursed by Punjab National Bank as on 31st May 2008.The Commercial Production is expected to commence by August, 2008.

The Company proposes to reduce operational costs by adding new and latest technologies and processes. It has been continuously making efforts to reduce the operational costs so as to increase the margins and remain competitive in the market. The new Plant & Machinery being installed will enable the Company to manufacture quality rubber conveyor belts, reduce the wastage, and also reduce the Manpower requirements. The existing plant (i.e. Unit-1) at Sangaria, manufactures conveyor beltings of width upto 1200mm, which enables it to manufacture conveyor belts of 600 mm in dual. The new Unit will not only enable the Company to manufacture conveyor belts of different configurations but also serve overall conveyor belting needs of different industries. All these factors will result into major savings for the Company and will add to its profit margins. The Company’s total income for FY 2007 was Rs 1548.01 Lakhs and PAT at Rs 134.99 Lakhs as against total income of Rs 747.02 Lakhs and PAT of Rs 10.84 Lakhs for FY 2005. Total income for the first 9 months of FY 2008 ended 31st December 2007 was Rs 1181.37 Lakhs and PAT at Rs 95.80 Lakhs.

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