Modis Pare Godfrey Phillips Holding By Around 4.5%

The K K Modi group has reduced its holding by around 4.5 per cent in Godfery Phillips India Ltd (GPIL) during the last three months of 2001. The group held 33.59 per cent in the company till June 2001, enhanced it to 35.62 by September, following which it reduced its stake.

Phillip Morris of the US, the foreign promoter, holds around 36 per cent in the company. Total foreign holding in the company, apart from the foreign promoter's stake, has increased from 3.17 per cent to 4.06 per cent in 2001.

Top company sources confirmed the change in the shareholding pattern, but said the change was not on account of sale of shares by promoters but because of a loan transaction.

"The promoters have pledged some shares for raising loan, and the creditor has in normal course transferred the shares to his account", the company secretary of GPIL said. This was reflected in the changed shareholding pattern, he said.

Some time back, Phillip Morris Inc had approached its Indian partner for a possible hike in its stake. The Modis turned it down as they did not agree on the price that Phillip Morris offered to them. The Phillip Morris buy offer was priced at Rs 1,400 per share.

While the price expected by the Modis was not spelt out, a figure of around Rs 2,000 a share was in the air. The scrip at present rules around Rs 406.

Phillip Morris had made an 'offer for sale' 20 years ago and sold out at par value to reduce foreign holding in the company to not more than 40 per cent. Since then, foreign direct investments in the tobacco sector has been blocked by the government.

GPIL posted a net profit of Rs 9.8 crore for the quarter ended September 30, 2001, against Rs 12.20 crore in the quarter ended September 30, 2000. Total income has decreased from Rs 149.80 crore in second quarter of 2000, to Rs 118. 80 crore in the quarter ended September 30, 2001.

Operating profit margins also were under pressure, so has been the total income. Lower staff cost could no longer help in enhancing bottomline. Excise duty payments declined owing to exemption granted to cigarette manufacturing in the north-east that helped the company increase turnover last year, did not add to the bottomline. Advertisement cost and other expenditure have also increased.