Varun Industries surges on entering into JV agreement with SKVHL

27 Dec 2011 Evaluate

Varun Industries is currently trading at Rs 236.90, up by 2.65 points or 1.13% from its previous closing of Rs 234.25 on the BSE.

The scrip opened at Rs 235.80 and has touched a high and low of Rs 244.80 and Rs. 235.80 respectively. So far 312163 shares were traded on the counter.

The BSE group 'B' stock of face value Rs 10 has touched a 52 week high of Rs 295.15 on 08-Sep-2011 and a 52 week low of Rs 155.05 on 20-Jun-2011.

Last one week high and low of the scrip stood at Rs 240.00 and Rs 210.00 respectively. The current market cap of the company is Rs 698.73 crore.

The promoters holding in the company stood at 64.99% while Institutions and Non-Institutions held 3.86% and 31.15% respectively.

Varun Group which holds exploration rights for Onshore Oil Block 3101 at Madagascar covering an area of about 6884 Sq. km. has entered into joint venture co-operation agreement with Sure King Varun Hong Kong (SKVHL) as special purpose vehicle (SPV) formed at Hong Kong between Varun Group and Da Qing Oil Field Company, one of the leading oil companies in China.

Under the agreement, Varun Group has agreed to cede 51% of its stake in the oil field to Da Qing group of China through the above SPV.

Da Qing group has committed to arrange for oil exploration and necessary fund raising process for the program. They have committed to pay $150 million as upfront money towards consideration to Varun Group for ceding 51% stake in the oil block.

With the above agreement Varun group will have the twin benefit of getting continued revenue through oil exploration process and also have liquidity which they proposes to utilize for the other previously programmed capex needs.

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