Ispat Industries

[chopra]

Dear traderji, Amitbe, saint, karthik, joy, supratik and other seniors,

If anybody can help with what is going on with ISPAT Ind.
With regard to the news with the merger with Ispat Metallics India Ltd (IMIL), an unlisted company.

I heard that If somebody is holding 10 shares that will become 6 shares of Ispat, so that will be the impact and they will also get the redeemable preference shares. This applies to everybody, including promoters because whatever equity they hold will also be reduced. Around 2019-2020 is the time when the shares can be redeemed.

Seniors please advise what to do.
I am holding ISPIND 840 @25 CMP 11.50.

Please give your valuable suggestions.

Best Regards,
Ashish

 

[Traderji]

Ispat Industries crashed yesterday after the stock exchanges made an announcement that the stock will be suspended from trading with effect from December 8, 2005 to allow the company give effect to a scheme of reconstruction and amalgamation.

Earlier, the company had fixed December 15, 2005 as its record date of allotment of shares in terms of a scheme of reconstruction and amalgamation. The scheme of reconstruction and amalgamation comprises reduction of existing 69.25 crore equity shares of Rs 10 each by 40 per cent and issue of 27.70 crore 0.01 per cent cumulative redeemable preference shares (0.01 per cent CRPS) of Rs 10 each at par in lieu of the aforesaid reduction in equity shares.

The scheme also includes the merger of Ispat Metallics India Ltd (IMIL), an unlisted company, with Ispat Industries.

Some previous news of interest...

Ispat Ind suffers Rs 233-cr Q2 loss

ISPAT Industries has slipped into the red with a net loss of Rs 233 crore for the second quarter ended September 30, 05 as against a net profit of Rs 77.5 crore in the corresponding quarter of the previous fiscal, reports Our Mumbai Bureau. The company said reduction in prices of finished steel products during the quarter was the reason for the huge loss, whereas prices of basic inputs had only reduced marginally.

However, whats alarming is that the company has reported an operating loss of Rs 71 crore against an operating profit of Rs 412.5 crore last year.

The company has pointed to several reasons, including man-made and natural disasters for its poor performance. It claimed that the second quarter of FY06 saw an unprecedented monsoon in Maharashtra, especially in Konkan, resulting in devastating floods.

Ispat Industries integrated steel complex at Dolvi, situated in the heart of the Konkan region, was affected by the rains. The company added the fire at Bombay High severely impaired supply of natural gas, which resulted in lower productivity.Income from operations during the quarter ended September 05 dropped 16% to Rs 1,337.6 crore, compared to income of Rs 1,590 crore during the previous quarter.

However, the cost of material consumed has fallen to Rs 690 crore against Rs 691 crore a year ago. The companys power & fuel cost rose by 16.3% to Rs 192.4 crore despite the claim that natural gas wasnt adequately available, resulting in loss of production.

 

[chopra]

Thanks Traderji.

Is this scrip is going to get delisted.
If it is going to get delisted then better to sell of all the shares.
Otherwise, What do seniors suggest, is it better to hold on or sell now.

Please advice.

Regards,
Ashish

 

[grouvvy]

Even I have the same concern. Should we hold onto this share ?

Grouvvy

Dear traderji, Amitbe, saint, karthik, joy, supratik and other seniors,

If anybody can help with what is going on with ISPAT Ind.
With regard to the news with the merger with Ispat Metallics India Ltd (IMIL), an unlisted company.

I heard that If somebody is holding 10 shares that will become 6 shares of Ispat, so that will be the impact and they will also get the redeemable preference shares. This applies to everybody, including promoters because whatever equity they hold will also be reduced. Around 2019-2020 is the time when the shares can be redeemed.

Seniors please advise what to do.
I am holding ISPIND 840 @25 CMP 11.50.

Please give your valuable suggestions.

Best Regards,
Ashish

 

[tomse]

Hai,

Any further news..

I am also holding Ispat Ind around 250 @13.40.

Hold or sell......? please advise

Tom

 

[sarada]

I posses 1000 shares of Ispat industries Which I bought at Rs. 28 72. Is it advisable to hold it?

 

[karthikmarar]

Chopra, Grovvy, Tomse, Sarada

Few more points regarding Ispat

The shares are not going to be delisted. The trading in this will be suspended from the 8th for restructuring and amalgamation process. The record date for the restructuring is 15th December.

After restructuring every shareholder will get 6 new shares for every 10 held. They will also get cumulative redeemable preferential shares (CRPS) of face value of 10 in lieu of reduction in the number of shares. These CRPS can be redeemed by the year 2019 (Hope the company will be still there.. or for that matter hope we are still here... )

Once restructuring is over trading will resume in the new shares. What value it will be listed ? what will be the value of the restructured stock? What is the financial state of Ispat metaliks (unlisted company), which is being merged with Ispat? Too many questions

Post restructuring, the total debt including Ispat Metaliks merger, will be in the region of Rs 7500 crore. The debt equity ratio will be 3:1.

The company after making losses for many years turned out a profit last year. The EPS turned from negative to positive. But as Traderji pointed out the last quarter was pretty bad.

There is no point of TA now on this now.

There are contrary views regarding this stock now. The optimists say that when the new stock is re-listed it will command a higher value. These are guys we are willing to wait and take that risk. The other school of thought is that it is not worth taking that risk considering the depressed steel sector, uncertainty of the re-listing price, huge debt and the time it may take the company to recover the current losses. They advocate quitting and putting the money elsewhere.

It would be unfair on my part to tell you to take a loss and quit. Neither I can tell you to hold as there are too many questions raised. The money is yours and you know your position better. So it depends on your risk appetite and the amount of loss one would have to take. So evaluate your position and take a decision.

Wishing you the best

Karthik

 

[chopra]

Thanks a lot Karthik.
Great post and to the point.

Originally Posted by karthikmarar
It would be unfair on my part to tell you to take a loss and quit. Neither I can tell you to hold as there are too many questions raised. The money is yours and you know your position better. So it depends on your risk appetite and the amount of loss one would have to take. So evaluate your position and take a decision.

As per me I am going to hold the shares as of now. As i am willing to take that risk of losing all also. Which I do not think is going to happen
It will be everybody's personal call as rightly said by Karthik also.

Post restructuring, the total debt including Ispat Metaliks merger, will be in the region of Rs 7500 crore. The debt equity ratio will be 3:1.

This infact is a toublesome point.

Thanks again karthik for putting up all the points together regarding ispat.

Best Regards,
Ashish

 

[shrinivas]

Dear Chopra, Grovvy, Tomse, Sarada,

I would at this point of time try to state some points very clear....Steel sector is not expected to do well this year...Ispat on the other hand has been making loss..moreover after the news of Delisting, the share fell sharply approx 30 within 3-4 days...still it is moving down...I personally do not believe it can do better in current scenariom, but you never know the story after demerger..where will the share stand, what would be the opening price, moreover the future performance of the company cannot be predicted keeping in mind the current scenario....
As the expert says, so would I, "the money is yours, the scenario is in front of you, you are the best judge for your money...you decide to take the risk or make losses and come out of the stock now"....
All the very best ....

Ganesh.

 

[sks]

OOOOOOOOOOOOOOOOps !!!!!!!!!!!!!!!!!!!!!!!!!! the sharp fall of 30 in my statement meant 30% fall in 3-4 days..

ganesh.