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As many as five listed companies, including Cairn India and DCM Shriram, have announced plans to buyback shares worth nearly Rs 6,000 crore from shareholders this year so far.
Other three firms that have launched their buyback offers are Isgec Heavy Engineering, Gujarat Apollo Industries and Indo Borax & Chemicals.
Open market route
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, according to SEBI data.
Cairn India’s Rs 5,725-crore buyback offer, which was launched in January, is the major among five programmes this year.
These five firms would have to complete their buyback plans within a period of six months from the 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 SEBI in August 2013.
Those who 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.
Meanwhile, 14 companies have completed their respective buyback programmes, so far this year, and have repurchased nearly 8 crore shares for Rs 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 Rs 500.80 crore to buyback around 2 crore shares followed by UPL Ltd which invested Rs 282.57 crore and repurchased 1.40 crore of its scrips from the shareholders.
Buyback
Buyback involves purchase of outstanding public shares by a firm to reduce the number of shares in the market. At present, companies can buyback shares in two way — open market and tender offer.
In an open market offer, firms can buyback 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.
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