It has also made the full provision for taxes amounting to Rs 5 crore. The extraordinary provision was made by way of a debit to profit before taxes. But the stock has been on an uptrend ever since the results were announced on May 6.

The stock market has been increasingly enthused with such companies in the last one year where the foreign promoter has increased its stake toatleast 51 per cent. The expectation that this enthusiasm reflects is that there will be a focus on better financial management and on transparent accounting. This is what has happened at ITW Signode in this accounting period during which ITW USA hiked its stake to 51 per cent. For example one of the extraordinary provisions made in the current year of Rs 3.25 crore was for unprovided taxes pertaining to 1996 (the previous year), besides provisions for ICDs given in the previous year which could not be recovered and some other bad debts.

Another example of improvements is the change in the accounting system from the mercantile system to the cash system which is more conservative and better appreciated. This move has been well received by the shareholders.

Even the fact that company will dip into reserves to pay the dividend should be well taken as the reasons are quite clear. For all practical purposes it was last years dividend of 40 per cent that should have been questioned as the 1996 profit of Rs 12crore was obviously unrealistic. In addition the interest cost has been brought down which should be taken as a very positive sign, keeping in mind that the operations of the company are working capital intensive and in the recent past the management has relied on expensive short term debt to fund its ever increasing receivables. The US-based parent organisation has partly addressed this problem during the year thanks to the preferential offer which infused cash worth Rs 49 crore.

Calling the cement bluff

The takeover rumours that have centred around a number of second rung cement stocks, however unbalanced their positions within the cement industry, has now engulfed Shree Cements. This is not unlike that of the recent DLF Cement takeover rumour which has been denied by Gujarat Ambuja Cements; the supposed bidder. In any case it made very little financial sense for anyone to want to take over DLF Cements. Yet the stock prices of both Gujarat Ambuja and DLF rose on the news. The same is true forShree Cements; given the plant location (capacities are concentrated in Rajasthan) it makes very little sense for a takeover as the area is brimming with over capacity and the prices here are the most unremunerative in the country. And to compound matters Shree Cements has embarked on an expansion for which it went to shareholders to raise fresh equity. The company's operations have been hit further by capacities coming on stream from the likes of DLF Cement and Prism Cements which are located close by.

In any case the rumours of a takeover have been denied by the Shree Cements management but here too the stock price is unyielding and hit a new high of Rs 30 up by 50 per cent in the last few days.

Despite the ground realities of the cement industry rumours surrounding cement stocks are bubbling over. And since early last week there has been some big movement in a few scattered cement stocks, ACC amongst them. But for none of these is there a convincing explanation. Cement prices are still down all overthe country with no signs of a revival in any market; even the fast growing southern market. In ACC's case it has been rumoured that the rise was a result of buying by a cartel of some dubious brokers and market operators. And recently Priyadarshini Cements has also been rumoured to be on the takeover block once again by Gujarat Ambuja Cement.