Finolex Cables Lines Up Second Buyback

Finolex Cables has earmarked Rs 75 crore for its second round of buy-back, at a price not exceeding Rs 250 per share of Rs 10 face value. The current rate is Rs 25 lower than the Rs 275 per share offered during the buyback in the last fiscal.

The company has also decided not to offer a fixed price for the buy-back. Instead, the rate will not exceed Rs 250 per share.

At the recent Finolex Cables' annual general meeting, shareholders gave their nod for the buy-back. Some shareholders had sought a fixed offer price, which the company management turned down.

During the last buy-back in fiscal 2000-2001, Finolex Cables received a poor response and it could buy-back only around 4.90 per cent of its share capital as against the target of 10 per cent post bonus issue.

Interestingly, the promoters of Finolex Cables themselves gave 1.10 lakh equity shares in the last buy-back. The shareholders criticised the promoters for giving in their shares for the buy-back when the objective of the buy-back was to benefit the shareholders in general. One shareholder alleged that promoters' move was tantamount to cheating the shareholders.

"We have not done any cheating by giving the promoters' shares in the buy-back, as we have followed the law properly after taking all the permissions from the Securities and Exchange Board of India (Sebi). As a means of enhancing the shareholder value, the directors have proposed the second buy-back of shares up to Rs 70 crore at a price not exceeding Rs 250 per share," PP Chhabria, chairman of Finolex Cables said.

The current year's buy-back price of Rs 250 per share represents a premium of 13 per cent over the average trading price of Rs 221 on Bombay Stock Exchange during the last 12 months preceding the date of the board of directors meeting that approved the buy-back of shares. The buy-back will be funded from the company's surplus cash and reserves.

Meanwhile, Finolex Cables has decided to soon come out with employees stock option scheme to retain and attract the best talent in the industry. The company plans to issue not more than 5 lakh equity shares of Rs 10 each under its ESOP.

..to delist from 4 SEs

Finolex Cables has decided to delist its equity shares from the stock exchanges at Ahmedabad, Bangalore, Chennai and Kochi on account of thin trading on these exchanges. However, listing of the company's equity shares will continue on the Pune Stock Exchange, BSE, NSE, OTC Exchange of India, Calcutta Stock Exchange and Delhi Stock Exchange.