Institutional investors offloaded stake in steel companies at a time when the sector has been showing signs of revival.
Over the last one year, such investors, including mutual funds, the Unit Trust of India, banks, financial institutions, insurance companies and foreign institutional investors, have pared their holding in Tata Steel by around 2 per cent, in Ispat Industries by around 1 per cent and in Jindal Vijaynagar Steel Ltd (JVSL) by 2.5 per cent.
Data on the shareholding pattern available with the stock exchanges as on March 31, 2003, show institutional holding in Tata Steel at 33.78 per cent, in Ispat Industries at 33.19 per cent and in JVSL at 4.84 per cent.
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The holdings as on March 31, 2002, were 35.82 per cent in Tata Steel, 34.22 per cent in Ispat Industries and 7.36 per cent in JVSL.
Analysts said the unloading move was surprising given that 2002-03 was one of the better years for the steel industry.
Prices over the last year have been on a high. Hot-rolled coils prices till last month were hovering around Rs 19,000 per tonne, around 42 per cent above the levels in March 2002.
At the beginning of last month, there was a sharp increase in prices across almost all flat steel products. Prices of hot-rolled coils appreciated by Rs 800-1,200 per tonne, cold-rolled products by around Rs 1,000 per tonne and galvanised products Rs 1,200-1,500 per tonne.
Moreover, the debt restructuring of companies like JVSL and Ispat Industries has already been chalked out by the financial institutions and approved.
Most of the upturn in prices was due to the gap in supply deficit in the China market. However, prices have started softening, which is also due to China.
Industry sources said though demand still exists in the Chinese market, there is a huge backlog and with new quantitative restrictions coming into effect the industry is playing a wait-and-watch game.
Tata Steel managing director B Muthuraman recently said that Tata Steel would not be affected by short-term fluctuations in steel prices as 60 per cent of its products were sold through contracts, either quarterly, half yearly or annually.