Strangely enough, the spurt has coincided with the decline of the Vajpayee sarkar that was accused by the estranged advisor Goswamy as being partisan to the Ispat-Mittals, promoters of GPIL. From its period of boom on NSE, the share has more than doubled to its current price of Rs 32.10 while on BSE, the gain has been relatively modest at about 50 per cent. On CSE, its regional exchange, GPIL has been quite a performer. Making its maiden appearance for 1999 on April 23 at Rs 20.80, the scrip rose to Rs 31.80 in less than two weeks, on the back of meagre volumes though.

The contrarian behaviour of GPIL showed up early in the beginning of this year. On BSE, the scrip slid from Rs 25 in January to an all-time low of Rs 10.75 by end-March, just when the bourses werelooking up. The same pattern was evident on NSE as well. Come second week of April 1999, when the Vajpayee government was almost on its last leg, GPIL picked up momentum. It changed hands on NSE and BSE at Rs 16 and Rs 13 respectively.

Around that time, though, on the GPIL's regional exchange, the scrip had made no appearance at all on the trading screen in calendar 1999. But once it appeared on the scene, it made up for all its long past eclipse on CSE.Just what could have caused this dream run of GPIL which is in stark contrast to the trend exhibited by most other stocks? More so, when the company is behind schedule in the implementation of its project under construction and its bottom line for the 9-month period ended December 1998 suffers from a liberal sprinkling of red ink. However, on examination of the corporate diary, it becomes evident that GPIL's rocketing price line has much to do with the impending conversion of its 17 per cent FCDs which is just round the corner.

Investors can recall thatGPIL had made a rights-cum-public issue of FCDs in November-December 1997. The rights offer was for 81.75 lakh debentures aggregating to Rs 81.75 crore, while the public issue was to net Rs 63 crore through the issue of 63 lakh debentures. As per the terms of issue, the FCDs were to be compulsorily converted into equity shares at the end of 17 months from the date of allotment into an appropriate number of equity shares at a price equivalent to 67 per cent of the average daily closing price of the equity shares of the company at CSE during three months prior to the date of conversion, subject to a cap of Rs 20 and a floor of Rs 10 per share. The pre-issue equity of GPIL was Rs 6.54 cr. The company's capital base was to balloon to a range between Rs 78.91 cr and Rs 151.29 cr, depending on the conversion price.

As it had turned out, GPIL's public offer was largely shunned by the investing public, resulting in the issue getting undersubscribed by a whopping 85 per cent! Ultimately, the underwriters to theissue, mainly financial institutions and public sector merchant bankers, had to pitch in with their contribution to save the blushes for GPIL. Even the company's rights offer was believed to have suffered a similar fate. Thus, an overwhelming portion of the FCDs, allotted on February 23, 1998, is currently in the hands of either the promoters or the institutions.

Interestingly, though GPIL's equity shares are listed on BSE, CSE and NSE, the company chose not to list its FCDs on NSE. Yet, in recent days, it is the GPIL's price line in NSE that appears to lead the way for CSE to follow.On CSE's trading screen, GPIL took its 1999-bow on April 23, which incidentally marked the beginning of the period in which GPIL's equity quotation would enter the conversion calculations.

If GPIL FCDs were to be converted at the maximum permitted rate of Rs 20 a share, the average daily closing price of its equity on CSE has to be at least Rs 30. And, it cannot be mere coincidence that its current price is well above Rs30!

Significantly, for all the recent action on GPIL's equity counter, its FCDs have not been traded at all. With the latter's impending conversion just round the corner, it would make more business sense for any genuine investor to pick up GPIL's FCD instead of its equity share, as the conversion cost would be only two-thirds of the market price of the equity.

The firm price trend of GPIL's equity shares and the simultaneous non-existence of quotations for its FCDs together appear to suggest more sinister plans underway. An uncanny operation is perhaps on to enable a favourable conversion of the company's FCDs when the D-day arrives less than three months from now, on July 23.

With GPIL's current equity base being just Rs 6.54 crore of which the promoters hold around 64 per cent, it ought to prove not very difficult for the market regulators to unmask the true identity of the operators behind the recent unwarranted price movement in the GPIL scrip. But will the regulators prove their mettle this timearound? Or, will it once again be a familiar case of locking the stable after the horse has bolted?