MUMBAI, July 30: Swedish Match Company, which pulled out of Wimco Ltd in 1991 by divesting its 39.49 per cent stake, is in talks with the present promoters, the Jatias, for acquiring a majority holding in the match maker.

The two sides have been negotiating a deal for some time now and are believed to be close to finalising an arrangement. A source said a final decision could be taken at the ensuing board meeting of the company slated for the first week of August.

The Wimco stock, which had touched a high of Rs 82.50 in December 1993, had been falling continuously since then and slumped to a low of Rs 10.50 in May this year. Since then, however, it has charted an upward course and touched a high of Rs 25 in mid-June. The stock closed at Rs 19.25 on the Bombay Stock Exchange (BSE) and at Rs 19.05 on the National Stock Exchange (NSE) on Wednesday.

The Jatias currently have a 38 per cent stake in Wimco. It is not known which route the company will take to give Swedish Match Company a majority stake. At current prices, the Swedish company will have to pay over Rs 30 crore for acquiring a 51 per cent stake in Wimco.

Interestingly, Wimco had planned a preferential issue of 2.7 crore equity shares of Rs 10 each to the promoters and others at a premium of not less than Rs 11 per share earlier this year.

The company had even convened an extraordinary general meeting (EGM) in February for seeking the shareholders approval. The move was dropped following objections from financial institutions, it is learnt.Despite repeated attempts, Wimco officials were unavailable for confirmation of the deal or comments.

Wimco, the largest manufacturer of safety matches in the country, had sales of Rs 237.70 crore and net profits of Rs 6.64 crore for the year ended March 1996. Net profit, however, rose to Rs 11.19 crore despite a fall in sales to Rs 214.15 crore for the year ended March 1997.

The company has already diversified into food processing, chemicals and agro-forestry but is also chalking out plans for consolidating its safety matches business.

It has plans to set up a Rs 200-crore project for the manufacture of medium density fibre board in Uttar Pradesh with a total capacity of one lakh square metres in phases. The company is also setting up a paper board plant with a capacity of 50 tpd at a cost of Rs 50 crore.

To meet its requirements of splints in making matches, Wimco has started a project to grow poplar trees, the main source of raw material. The company currently has a match making capacity of five billion per annum.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.