CALCUTTA, May 22: Negotiated deals could be an useful price-discovery mechanism especially in low-lying, thinly-traded stocks where the public holding is low. Unit Trust of India (UTI) discovered this in a recent win-win deal it struck.

The Rs 10-share of Macmillan India Ltd, a Chennai-based publishing firm in which the promoters' group and financial institutions hold close to 95 per cent, was lying untraded and unnoticed below par till recently.

A Unit Trust official said a few parties had approached it to acquire their stake in Macmillan with an initial offer of Rs 20 per share. Unit Trust turned down the offer.

Interest in the company heightened when the market discovered that a former Macmillan director had sold his personal holding in the company at Rs 78 per share. After protracted negotiations, UTI sold its holding of three lakh shares (including two bonuses declared in 1993 and 1995) at Rs 210. The acquisition cost of the shares was less than Rs 3 each, the source said.

The, it is learnt, was put through only three months ago. As a fallout of this, Industrial Credit & Investment Corp of India, which also had a decent holding in the company, realised an even better price of Rs 222 a couple of weeks ago.

Macmillan's sales and turnover for the year to March 31, 1996, were Rs 28.99 crore and Rs 7.55 crore. The EPS works out to over Rs 25 per share with the book value at around Rs 77. The total paid-up equity as on March 31, 1996, was Rs 2.8 crore. The scrip is listed on the Madras Stock Exchange.

The source said that it was precisely for this reason that a committee appointed by the Securities & Exchange Board of India in August 1996 proposed that deals done at prices beyond the prescribed bands be reported to it.

Macmillan, which started operations in 1976 as a supplier of typesetting and origination services to international publishers, today has 400 scientific editors, technicians, software and hardware engineers. It offers services such as copy-editing, disk translation, electronic file output, paper and film output and database management.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.