With the government's move to hand over management control of IPCL to a strategic partner, the sentiment at the counter has improved. On Friday, the stock closed at Rs 53.55, 7.8 per cent higher than the previous close of Rs 49.8. With the marketmen expecting companies like Dow Chem, DuPont, Exxon and Reliance Industries as keen contenders for the strategic partnership, the valuations of IPCL are expected to improve. Although marketmen are skeptical about the timing of the transfer of control, rumours of global giants like Dupont, Exxon and Dow Chemicals making presentations to the government has sent speculators rushing to the counter.

The IPCL board is slated to meet soon to finalise the details of divesting a part of the government stake in the company. Government, at present, holds 60 per cent of Rs 249 crore equity. Post-sale, the government's stake will come down to 34 per cent. However, if the international bond holders opt for conversion, which is due in February 1999,the government's stake will come down to 27 per cent.

While Reliance Industries is said to be one of the contenders, the RIL counter did not show any enthusiasm. On Friday, the stock closed at Rs 112.20. According to analysts, the government is unlikely to let RIL have controlling stake in IPCL as it would lead to a monopoly situation with Reliance dominating the Indian markets. The disinvestment commission has stressed that the strategic sale should not lead to market dominance by a single player.

Dipping Below Par

After Hindustan Motors and Steel Authority of India Ltd, Garware Polyester is now the third Group A company on BSE to go below par. The stock, which had been under a bear-hug for quite some time, finally dipped below par on Wednesday. The closing price of Rs 9.65 on BSE is an all-time low for the company since 1988. For the future, the prospects are dim and the worst may not be over yet for Garware Polyester. With the prices of downstream petrochemicals in a trough, massive capacityincreases in the polyester film industry and increasing competition from cheap imports, Garware Ployester's valuations are unlikely to change. At best, the stock will remain range-bound.

This is probably why even the rumours of Sumitomo Corporation picking up a 24 per cent stake in Garware Chemicals, a subsidiary of Garware Polyester, failed to ignite the counter. Apart from falling polyester prices, analysts blame Garware Polyester's ills on the ambitious expansion project which includes a 60,000 tpa DMT project. While company officials claim that the DMT plant will result in a saving of Rs 3,000-5,000 per tonne, industry watchers say it may be more economical to either source it from domestic suppliers or to import given Garware's high production cost.

In the first-half of the current fiscal, Garware Polyester's bottomline has already taken a hit. The company incurred a net loss of Rs 38.15 crore compared with a Rs 5 crore profit in the full-year 1997-98 primarily on account of the high interest burden.Most of the debt obligations can be attributed to the Rs 300 crore expansion project.

The Right Time

Titan Industries has been on the rise for quite some time. On Friday, the scrip hit the upper-end of the filter and closed at the day's high of Rs 69.75. On Thursday, too, the scrip had hit the upper-end of the filter on NSE. According to market sources, Titan's jewellery `Tanishq' has almost quadrupled its sales in the current fiscal. Installation of machines called `karatmeter' at its showrooms to reinforce Tanishq's premium quality seems to have paid off. The karatmeter incorporates the latest technology for quick accurate testing of the purity of gold.

Even the launch of gold coins bearing deity motifs have been a success as it has made a presence among corporates through the corporate gifting mode.

According to market sources, the company has received some large institutional orders for both its watches and jewellery division as corporate gift on account of the New Year. According tomarketmen, Titan's jewellery division will alone show a turnover of over Rs 100 crore. This division is expected to break-even by next fiscal. The company is also opening 12 new outlets of Tanishq jewellery. The company currently have 18 exclusive Tanishq showrooms.

This, plus the money coming in from the stake sale by Titan Industries in Timex Watches have led marketmen to hope of a hefty dividend in the current fiscal.

An Exception

At a time when most new listings are below their offer price, Amar Singh's Energy Development Corporation is an exception. The scrip has been listed on BSE at a 50 per cent premium to the offer price of Rs 10. Better still, the second day of trading on the counter saw the scrip inching up to Rs 16.

Indeed, a rare case of investors getting an exit option despite the bearish conditions prevailing in the market.

The returns for the investors are even better if one takes the tax benefit into account. EDC was the first company to tap the equity market with a Section88 benefit by virtue of it being granted an infrastructure status.

The par issue, to part finance the mini hydel power project in Karnataka, sailed through comfortably with a 1.75 times oversubscription.