The Hindu Business Line : Delisting of shares — Sharadha Terry chases shareholders for buyback

A NUMBER of companies had sought to delist their shares from the exchange in the recent past. But not many had gone beyond making a public announcement in trying to track down the shareholders for buying back the holding held by the public.

The city-based Sharadha Terry Products Ltd (STPL) was one of those, which had adopted a special resolution in September last for delisting its equity shares from the Coimbatore Stock Exchange, Madras Stock Exchange and the Mumbai Stock Exchange, since the shares of the company were either infrequently traded or not traded at all.

The promoter group, which was already holding a stake of over 77 per cent in the company, offered to acquire the shares held by the public at the `exit price' of Rs 22 per share, established by the reverse book-building process in accordance with SEBI guidelines.

Mr G. Kannappan assumed the role of an `acquirer' for acquisition of shares held by the public and Karvy Investor Services Ltd, Hyderabad, as the `manager' for the purpose.

The company had invited the shareholders to offer their shares to the acquirer at the exit price or despatch their share certificates along with the transfer deed duly signed, to the manager between February 17 and March 2, 2004.

The notice further stated that the shareholders could sell their holding at the exit price to the acquirer within a period of six months from the date of delisting.

Meanwhile, STPL has deputed some of its officers for tracking the address of the members, who were yet to sell their holding to the acquirer. One such staff told this correspondent that in a good number of cases, the change of address had not been communicated to the company or the registrar to the issue.

"We set out with the list every day, try and get the correct address from the post office, in some cases from their erstwhile neighbours and meet the shareholders. It is not always easy. But we have not given up the search," the staff said.

If the staff is able to trace the member, he makes it a point to visit him in person, gets the share certificate and the transfer deed duly signed by the transferor and settles his amount by paying at Rs 22 per share in cash (exit price).

While the acquirer is trying to consolidate his holding, it has come as a blessing in disguise for the retail investor, who had hitherto been wondering how to liquidate his holding without incurring a huge loss, especially when the shares were not traded in the stock exchange.

Not many companies take the trouble of tracing the address of its members either. STPL's method of approaching its members for buying back their holding has taken them by surprise.