Reliance arm picks up 8% in Emco

The Reliance group has picked up a 8.2 per cent stake in transformer company Emco for between Rs 4.49 crore and Rs 4.73 crore. The stake was picked up through BSES Infrastructure, a wholly-owned subsidiary of the group power arm BSES.

BSES Infrastructure has informed the Bombay and National Stock Exchanges that the company had acquired 4.98 lakh shares.

The BSES spokesman further said the investment was made at market price. "It is a routine investment decision based on good prospects of the sector,' the spokesman added.

Emco closed at Rs 95.85 at the BSE on Friday against the previous day's close of Rs 90.05.

Emco, promoted by the Jain family, posted net profit of Rs 2.60 crore on net sales of Rs 129.12 crore for the year 2002-03. The passage of Electricity Act 2003 has come as a major shot in the arm for the power sector.

Further, prospects of transformer companies have received a fillip owing to the ongoing accelerated power development and reform programme launched by the Union ministry of power.

Under this programme the stress is on revamping and upgrading transmission & distribution systems which is where transformers come in.

The company operates primarily in transmission and distribution as all its products and services are primarily directed towards that segment.

Further, the Electricity Act 2003 allows more than one competing company to distribute power in an area and this too is expected to give a fillip to modernisation of T&D systems.

Emco closed up 6.44 per cent at Rs 95.85, holding its ground though the market in general was weak.

The rise in the scrip was propelled by the news that BSES Infrastructure had taken a stake of 8.2 per cent in the company. The scrip went to a high of Rs 104.85, while the low for the day was Rs 92. Volumes on the BSE were 3.70 lakh share.

The stake acquisition by BSES was through open market purchases, according to information. On December 31, 2003, the promoters held around 41 per cent stake in the company and the institutions had a stake of 4.4 per cent, while the remaining was with the public and foreign investors.