Sell high, buy low dictum prods promoters to mop up shares

Insiders seem to be  in a rush to garner low-priced shares.

MUMBAI: Promoters and insiders of companies have lately been scooping up shares of companies they control, taking advantage of the large-scale erosion in share prices and thus consolidating their holdings. This is in direct contrast to what company insiders were generally doing when the markets were at an all-time high.

Among the majors to have taken the stock market route to shore up their valuation is Holcim’s Indian ventures. Associated Cement Company, the largest cement manufacturing company, has informed that Ambuja Cement India Private Limited has acquired 38.75 lakh shares amounting to 2.07% of the total share capital of the cement major.

The entire transaction to acquire ACC shares was timed between May 31 and June 14 — when the markets nosedived as shares across the board went on a free fall. Savvy promoters such as Swiss Cement major used the opportunity to shore up their holdings.

"The mode of acquisition is through open market and the shareholding of Ambuja Cement India Private Limited after the said acquisition is 6.58 crore shares to 35.23% of the total share capital of Associated Cement Companies Ltd."

Companies like Holcim and Oracle have been actively looking for opportunities to shore up their holdings in their Indian subsidiaries. Oracle, for instance, managed to hike its shareholding to above 50% from around 42% a few months ago.

The stock markets are at a low point and it is a logical move to consolidate holdings now," said a senior official whose company also has mopped up shares from the market.

While some FIIs and mutual funds were selling, it was the promoters and top brass who were more confident to throw their hats into the ring and buy shares.

Maharashtra Seamless Ltd, a Jindal group outfit, also saw one of its holding companies Global Jindal Fin-Invest Limited acquiring 50,000 shares aggregating to 0.08% of the total paid-up capital of MSL on June 14. The acquisition raised the holding company’s stake to 50.95 lakh shares to 8.55% of the total paid-up capital of the company.

It is not the promoters alone who bought shares during the period. Mercator Lines said Anil Khanna, a director of the company, acquired 1500 shares on June 13 and 1,000 shares on June 14 of the shipping company.

Another company that saw a ramp-up in promoter holding was Agro Dutch Industries. Vishwa Calibre Builders Pvt Ltd, an associate company of the promoters, bought 68,196 shares of the company between June 8 and June 15.

Himatsingka Seide, the silk-clothing fashion house, saw Nathmal Himatsingka, a promoter, acquiring 5,000 shares of the company on June 14. The mode of acquisition again was through the stock markets.

Orchid Chemicals & Pharmaceuticals informed the Exchange that Raj RajKumar, a director, acquired its 13,000 shares on June 13 from the market place.

Andhra Sugars said that its executive director P. Achuta Ramayya purchased 4,500 equity shares of the company.

The move by promoters is in direct contrast to what was happening earlier when the markets were rocketing skywards. Many of the promoters — not necessarily the ones mentioned in the story — were selling shares, capitalising on the high prices.

Rico Auto, an auto components company, also saw its promoters — Kapsons Associates — acquiring 36,000 of its equity shares.

Glenmark Pharma, DCW, Walchandnagar Industries, VLS Finance, Astra Microwave Products, REI Agro were the other companies that saw promoters buying shares when their shares had slid 20-25% during the melt down.