FCI OEN Connectors joins the list of MNCs such as e-Serve and Vickers, which have gone for delisting through reverse book-building. The open offer for 20 per cent stake by Bain in the Indian subsidiary, which opened in February 2006, was at a small premium to the prevailing market price.

As a result, it garnered less than 0.5 per cent of the outstanding shares. This time, the promoters look more serious. The floor price for the open offer has been fixed at Rs 391.38, based on its price over the last 26 weeks. Considering that the current market price is Rs 544, the exit price will have to be around the current price for shareholders to tender their shares.

The impact of the new management is already being felt at FCI OEN. Bain decided to exit from the electrical business globally, except in America and Japan, and the Indian subsidiary’s electrical business too was sold for Rs 28 crore.

FCI OEN, which makes connectors used mainly in telecom switching and transmission equipment, had to grapple with higher material costs, which went up 670 basis points y-o-y as a percentage of sales.

So, despite a 34 per cent increase in operational income, its operating profit margin declined 400 basis points to 18.1 per cent. The stock trades at 17 times trailing earnings, and with an earnings growth of just 12 per cent in CY06, investors would be better off to exit from the stock.