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The calling off of the deal between Hindalco Industries and India Foils has seen the price of the former dip on the bourses. Earlier, the news of discovery of some bad and hidden debts in Indian Foils (IFL) balance sheet had a negative impact on the Hindalco scrip since it was contemplating picking up a 51 per cent stake in IFL for Rs 65 crore. During the last ten trading sessions, Hindalco, except for a small recovery, has lost around eight per cent to Rs 499 from a level of Rs 531 on the Bombay Stock Exchange. On the National Stock Exchange, the scrip dipped from Rs 531.25 on December 10 to its current level of Rs 499. The price, however, recovered marginally on Monday with the scrip closing at Rs 509 on BSE.
Dipping aluminium prices world-over with the forecast that it can dip below its seven-year low of $ 1073 per tonne from the current level of $ 1230 per tonne have added to Hindalco's negative earnings prospects. If global aluminium prices go down to the predicted level and the rupee remains stable,it will put pressure on the bottomline of world's cheapest aluminium producer since it will lead to low cost imports.
The talks of discovery of some hidden bad debts and losses in India Foils' balance sheet by Hindalco Industries' due diligence team prior to its picking up of a stake in the former has made the acquisition more expensive. The scrip of India Foils has also dipped from its September level of Rs 55 (when the deal was struck at Rs 45) to its current level of Rs 24.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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