Open Offer Boon For Investors Of Itw Signode

The open offer announced by parent ITW Inc to acquire the entire 49 per cent public shareholding of ITW Signode India Ltd at Rs 80 per share is a blessing in disguise for the shareholders, given the scrip's drab performance on the bourses.

The company's turnaround over the last one-and-half years has failed to enthuse the markets. The 52-week high and low for ITW Signode on the National Stock Exchange and Bombay Stock Exchange stands at Rs 70 and Rs 36, respectively. At present, the stock is quoting at the Rs 54 level.

The poor performance of the stock, apart from poor liquidity, is attributed to the company's inability to show topline growth. Of the 49 per cent public holding in the company, about 20 per cent is held by Indian institutional investors, while International Finance Corporation holds a 5 per cent stake.

ITW Signode, which is into industrial packaging solutions, has recorded a net profit of Rs 3.99 crore on a sales at Rs 47.35 crore for the quarter ended June 2001. As a zero-debt company, ITW Signode posted a net profit of Rs 18.35 crore, after a tax provision of Rs 9.70 crore, on a turnover of Rs 194 crore for 2000-01.

The company declared a dividend of 25 per cent for the fiscal. All the shareholders, as on the record date fixed by the company, participating in the open offer will be eligible to receive the dividend after it is approved at the company's forthcoming annual general meeting to be held in September.

ITW Inc first acquired a 28 per cent stake in ITW Signode in 1982-83. Later in 1997, the company increased its stake to 51 per cent through a preferential allotment at Rs 83 a share.