The market seems to have got the feel of a possible deal. The scrip has witnessed an unabated run in the past four trading sessions, zooming from Rs 319 to the current level of Rs 434, a gain of Rs 115 or 36 per cent. Trading volumes too have shot up substantially from an average daily volume of 300-500 shares to over 10,000 shares on the Bombay Stock Exchange. Prior to this spurt, the scrip has seen an appreciation from Rs 235 in June to Rs 303 in early September.

The K K Modi group currently holds about 32 per cent in Godfrey Phillips (India) Limited (GPI) and another 11per cent is held by the M K Modi group through Modipon Fibres. Philip Morris holds another 36 per cent and the balance id held by public and financial institutions in the company's small equity base of Rs 10.4 crore.

K K Modi and M K Modi have already gone in for litigation over the ownership of the 11 per cent stake. As per the arbitrartor appointed by the Delhi High Court, Modipon cannot place these shares to an outside party and has to sell them to K K Modi for a consideration of around Rs 30 crore. According to analyst, Philip Morris too has been keen to increase its stake close to the 51 per cent mark and the only way is by acquiring shares from K K Modi after the latter acquires them from M K Modi.

At the same time, with ITC limited introducing a number of international brands like State Express-555 and Benson & Hedges, the market expects that Philip Morris is also likley to introduce its internationnal brand, Marlboro through its Indian venture Godfrey Phillips. The company also marketsinternational brands like Rothmans and Chesterfield. Godfrey is a dominant player in the north and west with prominent brands including Four Square, Red & White, Cavenders, Jaisalmer, Commando and Originals. Godfrey Phillips is the third largest cigarette manufacturer in India with a total manufacturing capacity of 15,000 million sticks per annum.

Godfrey Phillips recorded a 48 per cent increase in its net profit to Rs 38.85 crore for the year ended March 31, 1998 as compared to Rs 26.31 crore in the previous year. The company has announced a dividend of Rs 10 per share against Rs 7 in the previous year. Net sales at Rs 454.64 crore were up from Rs 397.71 crore in the previous year. GPI diversified into the tea business in 1987. and recently also ventured into the sports goods business as well and has opened Four Square Cricket Gear outlets in Delhi and Bombay.