Jaiprakash Scrips Cost Itc Classic Fin Dear
The huge gap between cost and market value of the long term strategic investment is despite the fact that the shares were purchased from the promoter of Jaiprakash Industries himself at what the company says was a substantial discount to the prevailing market price.
The latest annual report of the company carries the investment in the other than trade category.
The ITC group financial services flagship company had picked up 85,00,000 shares in Jaiprakash Industries at a price of Rs 61.44 per share, while the shares are currently being quoted at only around Rs 20 per share.
According to ITC Classic chairman Feroze R Vevaina, the strategic investment made in Jaiprakash Industries was a part of its gameplan to place the chunk of shares with interested companies at a premium. But unable to find buyers, the company had to abort its private placement plans for the time being.
The equity in JP Industries was bought in a block by ITC Classic and other group companies from the promoter himself at a substantial discount to the then market price with a view to holding them for a 2-3 year period by the end of which these investments would be placed out/sold back at an attractive return, Vevaina said.
According to ITC Classic managing director R Chand, the company's investment decision in blue-chip Jaiprakash Industries was taken because of the company's intrinsic worth. The company's intrinsic value is yet to be encashed and with lofty plans in the offing, we are confident that the prices will soon start moving northwards, Chand said. /font>