BUYBACK OF SHARES

----------K.N SUDARSHAN
 CONTENTS OF THE
PRESENTATION

 INTRODUCTION
 WHY BUYBACK ?
 CONDITIONS
 LIST OF THE COMPANIES
 CONCLUSIONS
 INTRODUCTION

 Buyback is a method of Cancellation of share capital.

 It leads to reduction of share capital of a company.
 Accordingly, a company can buyback its own shares to the
extent of 25% of the paid up capital and free reserves .
 WHY BUYBACK ?

 To reduce Dilution of control.

 To return surplus cash to Shareholders.
 To increase the underlying share value.
 To prevent Hostile Takeover Bids.
 To increase EPS.
 To eliminate odd Lots & Fractional Holding.
 SEBI GUIDELINES

The Companies are Permitted to buyback the shares through

the following moves…….
• Tender offers
• Dutch auction
• Reverse Right issue
• Stock Exchange
• Repurchase of odd lots
 The companies are not permitted to buyback through
negotiated deals,spot transactions,and private placements.
 Promoters have been debarred from participating if the
company opts to buyback shares through stock exchange
route.
 Companies buying through stock exchanges must disclose
Purchase details daily.
 The companies will have to specify the maximum price
payable in the resolution seeking shareholders approval.
 The buyback should be done only in cash and an escrow
account will have to be maintained by the merchant bankers.
 No company is allowed to withdraw the buyback offer once it
has announced.
 LIST OF COMPANIES
ISSUER METHOD OPENIN PRICE % OF
G DATE SHARES

Philips Tender 08-12- 105 49%

India ltd Offer 2000
Cadbury Tender Mar 02 500 49%
India ltd Offer
Carrier Tender Jul 01 100 49%
Aircon Offer
Otis Tender July 02 320 31%
Elevator Offer
Britannia Tender Sept 02 750 49%
Offer
 CONCLUSION

The best strategy to maintain the share price in a bear run

is to buy back the shares from the open market at a
premium over the prevailing market price.