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Sanjay Sardana
NEW DELHI, July 17: Vam Organics of the Bhartias is likely to sell its 34 per cent stake in Insilco Ltd to its foreign collaborator, Degussa AG of Germany. If the deal goes through, Degussa's holding in Insilco would double from the current level of 34 per cent to around 68 per cent.
According to sources, Degussa will be shelling out about Rs 51 crore for 1.72 crore shares, representing 34 per cent stake in Insilco's total equity of Rs 50.7 crore. Degussa is learnt to be willing to pay more than Rs 30 per share for Vam Organics' 34 per cent stake in Insilco. Against an acquisition price of Rs 30, Insilco's current market price is Rs 19.
According to sources, the Indian promoters are likely to sign the papers next week. However, replying to a faxed questionnaire sent earlier to AS Bhartia, S Ravi, a director on the Insilco board, strongly denied any such move.
Insilco's stock attracted a buyer freeze on the bourses on Friday with a huge trading volume of over 1.35 lakh shares on the National Stock NEW DELHI, July 17: Vam Organics of the Bhartias is likely to sell its 34 per cent stake in Insilco Ltd to its foreign collaborator, Degussa AG of Germany. If the deal goes through, Degussa's holding in Insilco would double from the current level of 34 per cent to around 68 per cent.
According to sources, Degussa will be shelling out about Rs 51 crore for 1.72 crore shares, representing 34 per cent stake in Insilco's total equity of Rs 50.7 crore. Degussa is learnt to be willing to pay more than Rs 30 per share for Vam Organics' 34 per cent stake in Insilco. Against an acquisition price of Rs 30, Insilco's current market price is Rs 19.
According to sources, the Indian promoters are likely to sign the papers next week. However, replying to a faxed questionnaire sent earlier to AS Bhartia, S Ravi, a director on the Insilco board, strongly denied any such move.
Insilco's stock attracted a buyer freeze on the bourses on Friday with a huge trading volume of over 1.35 lakh shares on the National StockExchange (NSE) with an outstanding buy order of over 10,000 shares. The scrip has shot up substantially from Rs 14 to Rs 19.2 over the past three sessions.
The company's scrip has has been on the rise in the past month and has shot up by more than 70 per cent from Rs 9 on June 22 to Rs 15.5 on July 2. After slipping marginally to Rs 13.5 on July 14, the scrip again shot up to Rs 18.7 on the Bombay Stock Exchange (BSE) with a trading volume of over 24,000 shares in the past three trading sessions.
Daily trading volumes in the past few sessions have improved substantially from a low of 200-1,000 shares a day to around 8,000-10,000 shares a day on the BSE.
The dry silica venture, jointly promoted by Vam Organics and Degussa AG of Germany with a 34 per cent stake each has not been doing too well. The company's performance in the past has failed to match its projections. Insilco even had to skip dividend for two successive years ie, 1995-96 and 1996-97. The company's performance for the year ended March 1997fell well short of the projections given at the time of its rights issue in May 1994. Net profit at Rs 0.90 lakh was well below the projected net profit of Rs 10.1 crore.
Ever since Insilco's 12,000 tonne per annum (tpa) dry silica project took off, the company's reserves have been negative and the accumulated losses mounted to a high of Rs 9.07 crore in March 1994. The accumulated losses have since come down to Rs 4.37 crore in March 1997 on a relatively huge equity base of Rs 50.7 crore. The company has managed to reduce its outstanding loans, which currently stand at over Rs 38 crore, from a high of around Rs 49 crore in 1995-96.
The company's performance has been affected due to low international prices, steady increase in prices of major raw materials and sluggish growth in the overall market. Insilco's profits could have taken a further beating, had its foreign collaborator not bailed out the company by deferring the royalty payment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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