Heard on the street: Sathavahana Ispat in focus as UK company eyes promoter stake

Shares of a small-cap steel company Sathavahana Ispat have gained substantially over the past few weeks amid talk that Stemcor, the world’s largest steel-trading company, is planning to buy promoters’ 42.2% stake in the company. Stemcor AG has increased its stake in the Indian company marginally from 14.7% in December 2010 to 14.8% in March 2011.

During the same time period, promoter holding in Sathavahana Ispat rose substantially from 36.2% to 42.4%. The buzz is that the UK-based company is planning to buy the additional equity at a premium to the market price. When contacted, Stemcor MD Mathew Stock said his company is interested in remaining invested in Sathavahana Ispat but he declined to comment on Stemcor's future plans.

If Stemcor raises its stake to 15%, it will trigger an open offer for minority shareholders. Gaining 22% over past one month, Sathavahana Ispat ended flat at Rs 56.8 against a 1.9% fall in the Sensex on Tuesday.


Contributed by Jwalit Vyas & Harish Rao