Business Daily from THE HINDU group of publications
Thursday, Sep 07, 2006
Business Daily from THE HINDU group of publications Thursday, Sep 07, 2006 |
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Corporate
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Buyback Natco Pharma fixes Rs 150 ceiling for buyback Our Bureau
The proposed buyback is expected to lead to reduction of outstanding equity of the company in future, thereby creating long-term shareholder value for the continuing shareholders.
Hyderabad , Sept. 6 Natco Pharma Ltd, the Hyderabad-based Rs 193-crore pharma company, has decided to buyback its shares of Rs 10 each from the open market at a price not exceeding Rs 150 per share. The buyback process would begin on September 12. Towards this, the company has earmarked Rs 7 crore, which represents around 5.72 per cent of the total paid-up equity capital and free reserves of Rs 122.38 crore as on March 31, 2006. It has appointed the Mumbai-based stock broking firm Fortune Financial Services (India) Ltd. "The buyback is being proposed keeping with the company's desire to maximise returns to investors and enhance overall shareholder value by returning surplus cash to the shareholders in an investor-friendly manner," the Natco Company Secretary, Mr M. Adinarayana, said. According to him, the company has accumulated free reserves of Rs 95.21 crore and satisfactory liquidity. The proposed buyback is expected to lead to reduction of outstanding equity of the company in future, thereby creating long-term shareholder value for the continuing shareholders. It is also a reflection of confidence of the management in the future growth prospects of the company, he said.
Equity shares
The number of equity shares to be bought back would depend upon the price paid for the shares bought back in the open market through stock exchanges and also the amount deployed, he said. As an illustration, at the proposed maximum buyback price of Rs 150 per share and for an aggregate amount of Rs 7 crore, the number of equity shares bought back would be 4,66,665 shares, representing around 1.72 per cent of the paid-up capital of Rs 27.17 crore. Should the average purchase price be lower than Rs 150 per share, the number of equity shares bought back would be more, while assuming deployment of a total of Rs 7 crore earmarked for the purpose. "However, the maximum number of equity shares that can be bought back depends on the continuous listing requirements of the stock exchanges. The maximum amount that would be utilised for the buyback will not exceed 10 per cent of the paid-up equity share capital and free reserves of the company," Mr Adinarayana told Business Line.
Related Stories: More Stories on : Buyback | Pharmaceuticals
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