Commodity Online
MUMBAI: A move to get into the power generation business does not seem to go easy with Crompton Greaves Ltd, as the company’s stocks lost over 30% during past one week on the Bombay Stock Exchange (BSE).

The nervousness of the investors was mainly because company was buying a large stake in the promoter entity. Crompton had suddenly made a decision to buy 40% of a promoter controlled entity. The company was found to be making an attempt for forward integration and get into the power generation business.

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The move by the company might lead to a little bit of revaluation of the stock. Yesterday the stock fell by 10%. Today the stock was trading at Rs. 108.65 down by over 11% on BSE. The stock had touched a high of Rs. 141.50 during last week, from which it fell by more than 30% till date.

According to analysts, the price paid by the company for acquiring a stake in a group firm was higher as the company's board had approved acquisition of a 41% stake for Rs.227 crore in Avantha Power & Infrastructure (APIL), a promoter group company. The company had made this announcement on Tuesday, 24 March 2009.

APIL is engaged in the business of generation, transmission and distribution of electricity. During Q3, Crompton Greaves' net profits had risen by 24.8% to Rs.84.77 crore over Q3 December 2007.

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