Indian Rayon Shelves Second Buyback Plan

Indian Rayon, the diversified Aditya Birla group major, has decided to defer its second buyback plan announced earlier this year.

The decision has been taken as the company has used up a major portion of the surplus cash earmarked for the buyback in its acquisition of PSI Data Systems for over Rs 99 crore. Indian Rayon picked up 70.38 per cent in PSI earlier this fiscal.

The second buyback was announced after a lacklustre response to the first one, where only 11 per cent of the shareholders tendered their shares against a planned 25 per cent buyback.

"We have decided to go slow on the second buyback scheme, and have not decided as to when we may revive the plan," senior executives of the company said. An official spokesperson confirmed that the buyback has been deferred.

India Rayon's second buyback plan has taken a backseat for the second time now. Immediately after the first buyback in October 1999, the company was looking at a second buyback at a better price.

But, the then proposal did not take off due to the acquisition of Madura Garments, for a direct investment of Rs 187 crore. The total cost was Rs 236 crore.

In the first occasion, Indian Rayon bought back only 76 lakh shares representing 11 per cent at Rs 85 per share against its offer of buying back 25 per cent of the equity.