NEW DELHI, February 20: Indo Rama Synthetics cannot be taken over, was OP Lohia's initial reaction to the sudden spurt in the trading volumes on the bourses over the last three days. Even as wild guesses and rumours on the sudden burst of activity in the scrip was playing the rounds, the promoter and managing director of the company was hardly perturbed. "I am not worried at all, with over 50 per cent holding with us," said Lohia.Over the last three days, more than 1.7 crore shares have been traded on the Mumbai and the National Stock Exchanges. This accounts for almost 12 per cent of the company's equity capital. The volumes peaked on Thursday when more than 87 lakh shares were traded on BSE. The price of the scrip has risen from Rs 8 to Rs 10.25 in four trading sessions.
"I have no clue as to who would be buying and selling. But with a stake of over 50 per cent, I am not worried," said Lohia. With the public holding less than 10 per cent of the Rs 155-crore equity, "I feel it is the foreigninstitutional investors including GDR who would be actively trading in the scrip," he pointed out.
While admitting that some FIIs and GDR holders would have been looking for an exit point, he said there could be others who have realised the turnaround in the industry and therefore picking up the scrips at a low price. Over 25 per cent is held in the form of GDRs, including the 5 per cent by Itochu. "Even after this frantic buying, I can assure that no single institution is holding more than 5 per cent of the equity. If an investor is buying, we welcome it," Lohia added.
To a query whether some buying could be on behalf of a potential buyer of the company he said "let them buy 10 per cent or even 20 percent, how does it affect the promoters, especially when we are holding more than 50 per cent."
Lohia said that a presentation made by the company to major FIIs a week ago about the prospects of the industry could have sparked off the buying. "Besides, total volumes cannot be as high as 1.7 crore over fourtrading days as there is the possibility of cross deals as well," he added.
A BSE broker, who maintained anonymity, said SBI Mutual Fund and Morgan Stanley were among the sellers. ING Baring's name too is being associated with the high volumes as it was associated with Indo rama's GDR. An FII dealer believes that the buying interest could have come from George Soros's fund. Lohia maintains that interest in the scrip could be because of the rise in the prices of products like POY, PFY and spun yarn. "Over the last 15 to 20 days the prices have risen by 20 to 25 per cent, from around Rs 85 to Rs 105. The bottomline, however, would only get a boost in the first half of the financial 1998-99," he said.
The industry has turned around and is now witnessing a 40 per cent growth "which has largely gone unnoticed", he asserts. Cotton shortage too has contributed its bit to give a boost to the volumes in the polyester industry.
Buying spreads to DCL and Sanghi Polyester
Market sources corroborate theclaim of Lohia that there is a turnaround in the industry. They point out that the buying interest is not confined to Indo Rama alone.
Other players like DCL Polyester and Sanghi Polyester too have shot into limelight. DCL Polyester's scrip has seen a volume of over 40 lakh shares in the last two days. Though trading around Rs 2, the scrip has seen large volumes of over 2 lakh shares every day over the last 10 days against the daily average of 5,000 shares.
The Sanghi Polyester scrip on Friday shot up from Rs 4.05 to Rs 5.25, with volume over 5 lakh in the last two days on BSE alone.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
