Calcutta, April 14: South Asia Regional Fund, a foreign institutional investor, has picked up a 3.5 per cent stake in Punjab Tractors ahead of its disinvestment.
The Punjab State Industrial Development Corporation has put on the block its 23.5 per cent stake in the company. A dozen companies are reported to have expressed interest in acquiring the corporation’s stake.
South Asia Regional Fund has acquired 21.39 lakh shares of the company, of which 4.4 lakh shares were bought from the custodian appointed by the Special Court dealing with the securities scam in the early nineties.
Confirming the sale of the shares to the fund, a senior official in the custodian’s office said it was part of the series of auctions that the custodian conducted over the last four months.
“The custodian has lined up securities worth at least Rs 500 crore for being auctioned over the next few months. We have also asked the Central Bureau of Investigation (CBI) to transfer to our custody shares worth around Rs 150 crore that were seized by it,” he added.
Besides South Asia Regional Fund, the Indian insurance companies appear to be bullish on the company. Only Unit Trust of India has reduced its stake in the company, albeit marginally.
Over the last few months, the Life Insurance Corporation of India (LIC) has raised its stake by 1.65 per cent to 13.91 per cent, while the General Insurance Corporation (GIC) has increased its holding by 1.74 per cent to 7.95 per cent.
Punjab Tractors earns around Rs 900 crore in annual revenues. It can produce up to 60,000 tractors in a year out of its two factories in Chandigarh.
Besides its 18 per cent share of the Indian tractor market and strong financials, what makes Punjab Tractors attractive to bidders is its strategic investment in three companies.
These are Swaraj Engines, Swaraj Mazda and Swaraj Automotives. Swaraj Engines and Swaraj Mazda are profit-making companies in which Punjab Tractors holds 33 per cent and 29 per cent respectively.
The latter is a joint venture with the Sumitomo Corporation and Mazda of Japan. The two Japanese companies together hold 26 per cent of Swaraj Mazda’s shares.