The proposed merger talks of Novartis AG and SmithKline Beecham Plc overseas have failed to generate any positve response on the bourses for the stocks of their Indian subsidiaries.

On Monday, Smithkline Beecham Pharma rose marginally by Rs 12 to Rs 388 and the other group company, Smithkline Beecham Consumer rose by Rs 6 to Rs 587 on the Bombay Stock Exchange. Novartis on the other hand dropped sharply by more than Rs 30 from Rs 960 to Rs 929. The stocks failed to generate any response and the slide continued on Tuesday as well.

Smithkline after opening at Rs 388 touched a high of Rs 392 before closing the day at Rs 373, down Rs 15 from the previous closing of Rs 388. Novartis rose marginally on Tuesday and closed around the days high of Rs 942.

Marketmen feel that these mega-mergers do take a lot of time and it has happened before also that the proposed mergers have failed to materialse. Last year, talks of merger between SmithklineBeecham and Glaxo failed to result into a corporate marriage. Later, merger talks between Clariant and Ciba Speciality, too, failed to take off and the hopes were shortlived.

Taking a cue from the past experiences, the market has taken the merger news of Smithkline Beecham Plc with Novartis AG with a pinch of salt.

Last weekend, it was reported overseas that the British pharmaceutical group, SmithKline Beecham Plc is in talks with Swiss group Novartis AG which could create the world's largest drugs company with a market value of over 110 billion pounds ($177 billion). It was that top executives from the two companies were understood to have met for preliminary talks since the beginning of February but had yet to agree the terms.

IOC zooms on bonus hopes

The IOC counter attracted heavy investment buying ahead of the board meeting to discuss the bonus issue on June 16. The stock on June 15 despite bearish and panic conditions, rose from Rs 329 to a high of Rs 358 before closing the day at Rs 351and a total traded volume of over 46,000 shares.

The stock initially rose from Rs 302 to Rs 340 in expectations of a liberal bonus in the last few days. The IOC stock, however, dropped in the last two days from Rs 340 to Rs 329 on Monday. Prior to the jump in the IOC stock on June 15, not only the price dropped, the volumes too have dwindled from an average daily trading volume of 20,000-30,000 shares in May to just 4,000-5,000 shares in the past few sessions.

The board of the domestic oil major Indian oil corporation is considering a bonus issue in its board meeting on June 16. The company had earlier his month obtained the nod from the petroleum ministry for issuing bonus shares.IOC's peers, Hindustan Petroleum and Bharat Petroleum, were also expected to consider bonus issue, which their board has put on hold. However, IOC is going ahead with its plan to reward shareholders through free shares in the form of bonus shares.

``The company is unlikely to dole out a very liberal bonus and the bonus couldbe in the ratio of one share for every one share held'', said an institutional dealer. The company after the bonus issue is expected to soon tap the domestic market to offload part of the government stake. IOC had the mandate to disinvest upto 10 per cent of its equity through the domestic issue towards the end of the last fiscal, but due to adverse market conditions, the company could not go ahead with its disinvestment plans.

The bonus issues is seen as a step to increase the liquidity in the stock. Currently, almost 91 per cent of the equity is non-tradeable. Out of this, government holds 81 per cent of the Rs 389 crore equity. Another 10 per cent is owned by Oil And Natural Gas Corporation.

The company is well placed with a relatively low equity of Rs 389 crore and a huge reserve pile of Rs 10224.9 crore as on March 1998. This yields a very high book value of Rs 272.6 and IOC's stock currently trades at a price-book value of just over 1.

Manna Glass in limelight

Thanks to the smartturnaround managed by Manna Glass Tech Industries, the counter on the Mumbai Stock Exchange has seen hectic activity. The market was expecting a turnaround in the company and the stock has been on the rise. The scrip, which was hardly traded on bourses, started trading on May 5 at Rs 9.95 from Rs 5.45 on April 20.

After one trading session in May, the stock started regularly trading in June. On June 1, the stock traded at Rs 11 with a very high volume of 43,300 shares. In the following four trading, the stock touched a high of Rs 13. On June 2 and June 3, 1.06 lakh shares and 1.18 lakh shares were traded respectively.

The current spurt has provided an exit opportunity to investors and some profit booking on June 14 has seen the stock slipping back to Rs 11.4 with a very high volume of 1.5 lakh shares. The current rally at this counter is also backed by a dividend of 27 per cent. Based on the current market price of Rs 11.4, the dividend yield works out to an attractive 23.68 per cent.

The company hasrecorded a net profit of Rs 5.69 crore on sales of Rs 16.55 crore for fiscal 1999. For fiscal 1998, the company incurred a loss of Rs 22,000. During the fiscal, the company accepted a proposal for collaboration from Sterm Glass & Glass Maschinenbau-Illmenau, Germany and had commenced production of its second phase which manufactures pharmaceutical grade glass containers. The company has received an order for monthly supply of 35 million vials from Soffieria Mezzadri, a European company. The company is also planning to dematerialise its shares.