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IFC exits Coimbatore-based LG Balakrishnan at loss

11 February, 2014

The International Finance Corporation, the private sector lending arm of the World Bank, has exited the Coimbatore-based auto component manufacturer LG Balakrishnan & Brothers Ltd, by selling its entire nearly 6 per cent equity stake for around Rs 11.51 crore ($1.85 million), incurring losses on its eight year-old investment.

The multilateral lender sold off 409,869 equity shares in LG Balakrishnan & Brothers on February 5 at a price of Rs 281.01 per share for around Rs 11.51 crore ($1.85 million) via bulk deals on BSE and NSE, according to a disclosure. Of the total, Reliance Mutual Fund—a part of Anil Ambani-led Reliance Group—bought around 4,00,000 equity shares or 5 per cent stake in the company for around Rs 11 crore ($1.7 million), the bulk deals data available on BSE showed.

Shares of LG Balakrishnan were trading at Rs 307 per share in the mid-day trading, an increase of 0.9 per cent per share from its previous close.

IFC had acquired 6.6 per cent equity stake in LG Balakrishnan in May 2006 at a price of Rs 39.89 per share, when its face value was Rs 1 per share, for around Rs 22.3 crore ($5 million then). Later on in 2010, LG Balakrishnan decided to reverse the stock split to make the face value of its shares Rs 10 again. Following this, the acquisition cost by IFC for 6.6 per cent stake in LG Balakrishnan became around Rs 400 per share. 

Now, considering the current share sale price of Rs 281.01, IFC has booked a 40-50 per cent loss on its investment in LG Balakrishnan. 

As on December 31, 2013, IFC held 6.9 per cent stake in LG Balakrishnan, while promoters owned 45.7 per cent stake, as per the information available with the stock exchanges.

In the December 2013 quarter, LG Balakrishnan—which makes transmission products such as automotive chains, sprockets, belts and tensioners—posted a net profit of Rs 17.01 crore from Rs 8.43 crore in the year-ago period, with total income of the company in the quarter rising to Rs 254.47 crore from Rs 242.15 crore.

(Edited by Joby Puthuparampil Johnson)


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IFC exits Coimbatore-based LG Balakrishnan at loss

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