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Auto Component Company’s Stock Rises Over 17% As Shares Trade Ex-Bonus; Do you Own?


Auto components company, Bharat Gears Ltd (BGL) shares surged more than 17 per cent on the BSE in Tuesday’s intraday trade as the company started trading ex-bonus, a day ahead of its record date for the bonus issue of the equity shares of the company.

Bharat Gears disclosed bonus shares with a 1:2 ratio. Simply put, the company will award eligible shareholders one bonus share in addition to the existing two equity shares. Under the bonus shares, a total of 51,18,35 equity shares with a face value of Rs. 10 each are proposed to be issued.

Ex-bonus date is an important day for investors to be eligible for bonus shares. To become eligible for bonus shares, an investor should buy the stocks of a company at least one day or two days before the ex-date. This is because of the T+1 and T+2 settlement cycles.

Generally, a listed company distributes bonus shares on their existing equity shares to current shareholders free of cost. A listed company issues bonus shares due to free reserves and surplus and adding fresh capital. The face value remains the same post bonus issue.

The company has fixed September 28 as the record date to determine eligible shareholders for the bonus issue. The company plans to pay the bonus shares within two months from the date of approval by the board of directors on August 24, 2022.

“We wish to inform you that the members of the Company, in their Annual General Meeting held on Tuesday, September 20, 2022, inter alia, considered and approved the issue of Bonus Shares to the members of the Company by way of capitalization of reserves in the ratio of 1:2 i.e. issue of one equity share for every two equity shares held by the members whose names appear in the Register of Members or as the beneficial owner(s) of the Equity Shares of the Company, in the records of the Depositories, on the close of business on the Record Date being September 28, 2022,” the company had informed in an exchange filing.

The bonus is out of the company’s free reserves is over Rs 5.1 crore. As of March 31, 2022, the company has free reserves of more than Rs 5.8 crore. Post bonus issue, the company’s share capital is expected to be more than Rs 15.35 crore compared to the current share capital of over Rs 10.2 crore (pre-bonus issue scenario). Bonus shares are fully paid additional shares issued by a company to its existing shareholders.

Bharat Gears Ltd(BGL) promoted by Bharat Steel Tubes and Raunaq & Company in collaboration with ZF Friedrichshafen Germany was incorporated in 1971 to manufacture automotive gears. The foreign collaborator holds 25.99 per cent stake in the company.BGL has two division i.e Automotive gears division and Industrial Furnaces division with the former contributing around 92 per cent of the turnover and the later the balance.

The automotive gears division manufactures a wide range of gears – hypoid spiral gears and differential gears which go into axle assemblies and parallel axes gears and shafts which make up the gear box assemblies. This division supplies to OEMS in tractors trucks & Bus and Utility vehicle industries. The company also serves the replacement market and exports to overseas market.BGL’s two gear manufacturing units were located at Mumbra(Thane Dt) Maharashtra and Faridabad Haryana.

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