ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Opportunities in Power Equipment

Hansavivek HINDUSTAN BROWN BOVERI has not renewed the sole selling agency and distributorship agreement of Lar- sen and Toubro which expired on March 19 last and has set up its own marketing organisation for the sale of its products. In 1968, the management of Brown Boveri and Company of Switzerland, the then holding company of HBB, approached L and T to acquire a shareholding in HBB and to work as a sales distributer. By the end of 1973, BBC had reduced its majority shareholding in HBB to 27 per cent by transferring a substantial portion of its shares to L and T. Consequently, L and T shareholding also stood at 27 per cent and it was appointed sales distributor and selling agent for five years from March 20, 1974. During this period HBB's order booking went up by 300 per cent and sales increased from Rs 15.66 crores to Rs 29.93 crores and this enabled it to improve its operations significantly. The value- of HBB share had risen to Rs 265 in March 1979 after two bonus issues, whereas it was below its par value of Rs 100 in 1972. As HBB did not renew .the agreements for a further period, L and T decided to dispose of the shareholding. In accordance with the wishes of Brown Boveri and Company, it transferred its shareholding to the financial institutions. Sale of HBB shares offered in one block to the institutions was effected at a net price of Rs 210 per share against the average purchase price of Rs 59 per share.

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