Modis up Bihar Sponge stake
The Modis have bought out German development financial institution DEG’s 7% equity stake in Bihar Sponge Iron in a Rs 5.5-crore deal.
By TNN |
NEW DELHI: The Modis have bought out German development financial institution DEG’s 7% equity stake in Bihar Sponge Iron in a Rs 5.5-crore deal. After this deal, Umesh Modi group has raised its stake in the sponge iron manufacturer from 55% to 62%.
The transaction was completed last week at Rs 10.36 a share, a major discount to its current price which touched a one-year high on Wednesday before closing at Rs 56.7. As per the management, the transaction price was frozen early this year when the scrip was trading at a lower level and the deal took time, given the regulatory approvals.
The Rs 200 crore company is a joint sector partnership with the government of Jharkhand holding 8.6% stake in the company. It was the first coal-based commercial sponge iron plant in India, which commenced operations in 1989.
The ailing sponge iron producer, which had suffered financial setback in the past was restructured in 2004 by the Board of Industrial & Financial Restructuring(BIFR).
Thereafter, the company has expanded production capacities and generated net profits for two consecutive quarters starting with fourth quarter of 2006-07. However, it again reported losses during the second quarter of FY08.
The transaction was completed last week at Rs 10.36 a share, a major discount to its current price which touched a one-year high on Wednesday before closing at Rs 56.7. As per the management, the transaction price was frozen early this year when the scrip was trading at a lower level and the deal took time, given the regulatory approvals.
The Rs 200 crore company is a joint sector partnership with the government of Jharkhand holding 8.6% stake in the company. It was the first coal-based commercial sponge iron plant in India, which commenced operations in 1989.
The ailing sponge iron producer, which had suffered financial setback in the past was restructured in 2004 by the Board of Industrial & Financial Restructuring(BIFR).
Thereafter, the company has expanded production capacities and generated net profits for two consecutive quarters starting with fourth quarter of 2006-07. However, it again reported losses during the second quarter of FY08.
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In a press statement, the company stated that the state government of Jharkhand has approved the allotment of 408 hectares of iron ore mine to Bihar Sponge Iron and that it is targeting to complete the development work of the mine within the next 3 years.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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