The move will help the firm avoid Rs 6.6-cr fine
The board of directors of Crompton Greaves on Friday approved the proposal to buy back shares worth over Rs 265 crore.
The company said it would buy back shares from the open market at a price of up to Rs 125 a share.
Following the news, the shares of Crompton Greaves surged 9 per cent to close at Rs 87.30 on the BSE. During the intra-day, the stock soared to a high of Rs 89.35. About 20.2 lakh shares of the company changed hands on the BSE, while over 1 crore shares were traded on the NSE.
This is the first issue, after the Securities and Exchange Board of India in its recent board meet made it mandatory for the companies to buy back at least 50 per cent of their repurchase offers. This means Crompton Greaves have to purchase at least Rs 132.5 crore worth shares. Otherwise, it will face a fine of 2.5 per cent of the entire issue (about Rs 6.6 crore). Besides, the companies would have to complete their buy-back offers within six months, SEBI had said and added while those not being able to meet the target would be barred from launching another offer for a period of one year.
SEBI also said companies should keep 25 per cent of the proposed buy-back offer amount in an escrow account. For this, Crompton Graves has to set aside Rs 66.25 crore.
The move was aimed at averting the companies from making non-serious offers that could wrongly influence the share prices, SEBI had said.