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Jaiprakash at new high on accord over Iraqi dues

Jayanta Mallick

KOLKATA, July 9

THE Jaiprakash Industries counter today hit the 52-week high of Rs 43.75 on the BSE and closed at the level of Rs 41.40 on profit taking on the NSE. The combined volumes on the two exchanges were around 50 lakh shares. The stock's all-time high on the BSE was Rs 137.50 (recorded on January 4, 1993).

Expectation of a better performance in the first quarter and reduction of credit liability to the tune of Rs 272 crore have improved the sentiment for the stock. According to Mr Ajit Day of Dayco Securities, settlement of a large part of the over 10-year old dues from Iraq will reduce the interest cost substantially and increase the profitability of the company in the current year.

Mr Day also mentioned that the cement business of the company, which now was with a wholly-owned subsidiary, Jaypee Rewa Cement Ltd, was expected to show improved topline and bottomline growths in the first quarter.

Mr Ravi Rajagopal, Company Secretary of Jaiprakash Industries, told Business Line from New Delhi that the set-off of the Rs 272 crore loans and advances from the Exim Bank-led consortium was expected to be effected in the second quarter.

"Under a comprehensive arrangement, the Government of India has taken over the Iraqi liability and is set to issue a bond worth Rs 272 crore in favour of Exim Bank against the certified dues of Jaiprakash from Iraq along with a portion of interest that has accrued," Mr Rajagopal explained.

"We have already signed an agreement with Exim Bank to give effect to the arrangement. The Government will now issue the bond to the bankers," he added. However, a portion of the interest, (accrued prior to the certification of Iraqi dues by the Government) will remain unsettled.

The dues were caused by the outbreak of the Gulf War after which Iraq failed to make the payments for construction work done by the company.

The Jaiprakash scrip in its current rally has been moving up with corrections since May 22 from a level of Rs 28 with volumes of 2.57 lakh shares on the NSE.

"The construction market has been buoying up. The 2001-02 fourth quarter result of the company amply indicated the trend," a NSE broker said.

Jaiprakah recorded a net of Rs 58.93 crore in the quarter to March 31, 2002 against Rs 34.49 crore in the corresponding quarter of 2000-01. The company's net profit for the whole of 2001-02 rose to Rs 127.98 crore (Rs 98.75 crore).

The promoters and associates hold around 47 per cent in Jaiprakash, while institutional holding is placed at 7 per cent and public holding around 32 per cent.

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