The Chennai-headquartered IP Rings Ltd (IPR) from the stable of Amalgamations, the conservative South Indian conglomerate, has suddenly caught the fancy of investors. It all began on the 4th of this month, when the IPR counter, contrary to its tradition of trading volumes in only a few hundred shares, recorded a whopping turnover of 6.90 lakh shares on BSE in Mumbai. If the dramatic huge volume changing hands created an obvious flutter, then the revelation of the identity of the buyer as Enam Securities caused a flare up of the scrip. Today in the market, Enam, rightly or wrongly, notwithstanding certainalleged wrongdoings by it, is riding high on a reputation of being one broking house that has the Midas touch. Many in Dalal Street vouch that a major portion of the present rise in infotech stocks is due mostly to Enam's astute investment banking skills. This section draws inspiration from the fact that Enam has been closely associated with Infosys, the current rage of the market, since the latter's lackluster market debut.

In IPR, Enam Securities has picked up a 9 per cent stake, amounting to about 6.40 lakh shares at around Rs 40 a share, largely from Morgan Stanley Fund. The arrival of Enam seems to have heralded a rush by a herd of retail investors, who can be best described as blind followers of the Enam trail, to flock to the not-so-green IPR meadow. On the back of the resultant increased volumes, the scrip has spurted to Rs 65.50 on BSE. The IPR rally has posted a gain of over 50 per cent in just 7 trading sessions since Enam's acquisition. And to Enam, the capital gain on its investment has been Rs1.44 cr in just 11 days, a return of over 1700 per cent annualised! Promoted by the Amalgamations group in 1991, IPR made its initial public offering at par in May 1992. The issue was to part-finance the Rs 10.85 cr project for the manufacture of piston rings in technical collaboration with Nippon Piston Rings Co, Japan (NPR). The sophisticated piston rings find extensive application in the automobile industry.

The post-issue equity of IPR was Rs 6.33 cr. In fiscal 1996, the company issued 3,52,100 equity shares at a premium of Rs 147 a piece to NPR on a preferential basis. Simultaneously, the Indian promoters were also preferentially issued 3,65,100 convertible warrants. Each warrant was entitled to one equity share, at a premium of Rs 147, within 18 months from the date of allotment. To the Indian promoters' credit, they sought conversion of the warrants into equity shares in fiscal 1997 itself, that is much before the designated date, even though the market price of the scrip was ruling below theconversion price. Post-conversion, IPR's equity increased to the present Rs 7.04 cr.

Amalgamations group, the promoters of IPR, at present holds about 65% of the equity. The latest entrant, Enam, with a 9 per cent stake, is the largest non-promoter shareholder, second only to Amalgama tions. The foreign collaborator, NPR, holding 5% equity, is placed third. The rest of the equity is divided between financial institutions and general public. It is reliably learnt from the circles close to the company that IPR's promoters are neither greatly excited nor unduly worried about the fancied entry of Enam, or, for that matter any `outsid er', into the company. For one, they have the controlling inter est. Also, two things - the continued expansion leading to tre bling of the production capacity as well as the last acquisition of the equity at a hefty premium, at Rs 157 a piece, more than what Enam has now paid - have unequivocally demonstrated their commitment to and confidence in the company's future prospects.Though, for the present IPR's fortunes have turned for the worst in the current fiscal. The first nine months' profitability has dipped to Rs 1.23 cr as against Rs 3.08 cr recorded in the corre sponding period of the previous fiscal. Slumps in turnover in the current fiscal are also glaring. The capacity utilisation, which was at 71 per cent in fiscal 1997, plummeted to 38 per cent the following year due to the dual impact of increased capacity and reduced produc tion. Confounding its woes, there is no sign of a revival in the automobile sector, which is so essential for IPR's well being. As if in clear acknowledgement of the difficult business conditions on hand and ahead, IPR's management had categorically acknowl edged in its annual report for fiscal 1998 that the prospect for the current year was none too bright. Under the circumstances, where internationally seasoned Morgan Stanley developed cold feet at the bleak immediate workings, Enam in its `professed' native wisdom has unhesitatingly dared toventure investment based on a long-term perspective. Enam has perhaps looked at the quality and value, especially the replacement one, of the productive asset, whereas Morgan Stanley has gone by the old adage "A bird in hand is worth two in the bush".

Well, that in essence also succinctly sums up the general differences in approach between the investors from overseas and India. Meanwhile, Enam can hopefully count on any handsome realisation only when IPR's bottom line acquires a healthy look. Looking at IPR's current working, that is too distant a dream.

Could there be something else? Whatever may be Enam's justification, the undeniable fact of the matter is that its entry has enthused a rally in IPR. And Enam's `Midas touch', so evident in infotech stocks, seems to hold more confidence for IPR's market capitalisation among the investors.

Incidentally, Morgan Stanley too had earlier capitalised on Enam's market appeal. Its own mutual fund offer, which witnessed an unprecedented investor responseresulting in long-winding queues at its collecting bank counters, was lead managed by Enam in 1994. From another standpoint, it has, of late, become a hilarious market pattern that after Morgan Stanley has scraped a scrip, the `scrap' gains handsomely on the bourses leaving the fund managers with egg on their faces. In the recent times, after Morgan Stanley's sale of MRF, Vikas-WSP and, now, IPR, all of them have gained handsomely. The pattern has made the wags comment that it is time to buy when Morgan Stanley sells!

(Arranged by Investar -- The Aarthik News & Research Syndicate)