Markets Nonchalant To Development

On September 3, the 2:3 swap worked out by S B Billimoria and Price Waterhouse, auditors of the respective firms, would not have been possible, given the then prevailing market price of the Eveready and Mcleod Russel scrips. The gap between 2 Eveready and 3 Mcleod shares then was over Rs 100.

From September 9 the swap ratio began to be approximated as the difference between the value of three shares of Mcleod Russel and two shares of Eveready Industries began to close in on each other.

On September 23, the 2:3 swap could be accepted by the shareholders considering that the ratio of the share prices of both the companies worked out to almost the same amount. The gap between 2 Eveready and 3 Mcleod shares had narrowed to Rs 18. While the price of the Mcleod Russel scrip has come down over the last three weeks, that of Eveready Industries has crept up. When contacted by Business Standard, Aditya Khaitan, one of the directors of Mcleod Russel, said: This is a mere coincidence, and not of any consequence. The valuation of the shares was done over the last few days, and we have just received the calculations. Also, the Indian market does not follow any logic. So, please do not work out any swap ratios on the basis of market prices.

 

On the secondary market, the share price of Eveready Industries (EIL) firmed up from Rs 123.50 on September 2, to Rs 142.95 on September 23, indicating a rise of Rs 19.45 over a period of three weeks.

EIL's holding company, Mcleod Russel's share price, on the other hand, has taken a beating over the last three weeks. After opening at Rs 118 on September 3, the share price continued to slide and finally closed at Rs 89 on September 23.

Though there has been virtually no trading in the scrips over the past few months, the share-price movements of Eveready Industries and Mcleod Russel in September has been interesting.

As per the scheme worked out by the company, for every three shares of Mcleod Russel, shareholders will get two shares of Eveready Industries.

A section of brokers, however, attribute inactivity and broker disinterest in the counters to the low floating stock of the companies' in the market. Moreover, tea scrips, once the most actively traded stocks in the Calcutta market, no longer hold investors' fancy.nt>