5 Cos Buying Back Shares Worth Rs 6k crore - The New Indian Express

5 Cos Buying Back Shares Worth Rs 6k crore

Published: 19th April 2014 06:00 AM

Last Updated: 19th April 2014 01:02 AM

Five listed companies including private sector oil major Cairn India and DCM Shriram plan to buy-back shares worth Rs 6,000 crore from shareholders this year so far.

The other three firms that have launched their buyback offers are Isgec Heavy Engineering, Gujarat Apollo Industries and Indo Borax and Chemicals.

Buyback involves purchase of outstanding public shares by a firm in order to reduce the number of shares in the market. Presently, companies can buy-back shares in two way – open market and tender offer.

In an open market offer, firms can buy-back shares from shareholders without knowing the buyer, while tender offer involves the company writing to its shareholders individually to know their willingness for sale of shares in the buyback.

According to market watchdog Sebi, together, all the five firms have planned to infuse a capital of Rs 5,940.85 crore to repurchase 19 crore shares from their respective shareholders through open market route on stock exchanges.

The five firms would have to complete their buyback plans within a period of six months from date of opening their offer and it would also be mandatory for the companies to repurchase at least 50 per cent of the offers, under the new norms issued by the market regulator Sebi in August, 2013.

Those not able to meet the target would be barred from launching another offer for a period of one year while they could also be imposed with a penalty amounting to maximum of 2.5 per cent on the funds lying in the escrow account.

Cairn India’s whopping Rs 5,725-crore buyback offer, which was launched in January, is the major among five programmes this year.

Meanwhile, about 14 companies have completed their respective buyback programmes, so far this year, and have repurchased nearly 8 crore shares for an amount of `1,210.62 crore.

These include buyback plans of Crompton Greaves, Aptech, UPL Ltd, Jindal Steel & Power and Maharashtra Seamless.

Jindal Steel and Power utilised a total of Rs 500.8 crore to buyback around 2 crore shares followed by UPL Limited which invested Rs 282.57 crore and repurchased 1.40 crore of its scrips from the shareholders.

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