The Mehta group is mulling the possibility of merging two of its cement companies, Gujarat Sidhee Cements and Saurashtra Cement, to counter losses in the former and improve synergies.
Company officials confirmed a merger is being discussed, though no formal proposal has been forwarded to the boards. We are considering the pros and cons and a financial restructuring package will have to be worked out for Gujarat Sidhee, sources explained.
The move has already sent the scrips of the two companies into a tizzy, with both counters witnessing hectic trading. The Gujarat Sidhee scrip rose from Rs 2.20 at the beginning of December to close at Rs 3.80 on the BSE yesterday and at Rs 2.90 on the NSE. On Monday, 1.15 crore shares of the company were traded on the BSE.
The Saurashtra Cement stock price has also increased steadily. It rose from Rs 31 in the first week of December to a high of Rs 44 on the NSE yesterday, before closing at Rs 37.30.
Market sources said leading operators have been warehousing the shares of Gujarat Sidhee Cement in anticipation of a merger with Saurashtra Cement. There were also unconfirmed reports that Morgan Stanley Mutual Fund was a seller at the Gujarat Sidhee counter. Morgan Stanley officials, however, refused to comment. As on March 31, 1997, Morgan Stanley Mutual Fund held 34 lakh shares of the company, worth Rs 1.7 crore, through its growth scheme.
Gujarat Sidhee is a BIFR case while Saurashtra Cement made a net profit of Rs 3.07 crore for the six months ended December 1996.