15% Conversion Of L & T Gdrs
Larsen & Toubro, the engineering and cement major, has seen a 15 per cent conversion in its outstanding global depository receipts over the last year spurred primarily by a 40 per cent drop in the company's GDR price.
The company has come out with two GDR issues till date, in 1994 and 1996, when 1.61 crore shares and 1.75 crore shares were issued. While the issue price of the first was $16.70 per GDR, that of the second was $15.35. Each GDR represented two domestic equity shares.
The company's annual report indicates that around 2.84 crore shares are with GDR holders, implying around 52 lakh GDRs have got converted over the last year, or around 15 per cent of the underlying equity shares.
"Considering the ruling price of $9 per GDR, or a close to 40 per cent discount to the issue price, the GDR investors have seen no return at all. This reflects that GDR holders have converted the GDRs into equity shares and have sold them in the domestic market," an analyst with a foreign brokerage.
During the last fiscal, the L&T scrip has also seen volatile movements on the domestic bourses. Though it did see a high of Rs 629 in January this year, in the New Millennium bull run, it also hovered in the sub-Rs 200 levels for several weeks.
The company, despite being a leader in the engineering and construction sector, has not been able to influence the stock price despite for sporadic bull runs. Analysts attribute this to the diversified company's cement division, which has successfully managed to pull down the company's bottomline significantly over the years.
Larsen & Toubro is finally going for a major restructuring wherein its cement division is slated to be hived off into a separate subsidiary and a strategic partner will be roped in.
L&T is looking at holding around 51 per cent in the new cement company.
The financial institutions are the largest shareholders in the professionally-managed company with a 31 per cent plus stake, while Reliance Industries holds around 8 per cent.
ENDS