Tata Chemicals Pegs 15% Buyback At Rs 60 A Share

Tata Chemicals today has announced a share buyback of up to 15 per cent of its paid-up capital at a maximum price of Rs 60.

This represents a 45 per cent premium to Monday's closing price of Rs 41.40 on the Bombay Stock Exchange.

The buyback is expected to involve a cash outgo of Rs 162.58 crore at the maximum. The company's book value stands at Rs 107, far higher than the ruling market price, while its reserves and surplus, as of March 31, was Rs 1,764.74 crore.

"This is the most optimum way of sharing our current surplus cash with the shareholders," Prasad Menon, managing director of Tata Chemicals said.

 

Tata group companies currently have a 30.39 per cent stake in the chemicals firm. The equity capital of the company stood at Rs 180.63 crore as on March 31, 2001.

The board, which met on August 13, has recommended the adoption of the open market route for the buyback through the exchanges.

The board will decide on the implementation of the buyback after the requisite approvals, including shareholder approval.

The recently enacted regulations governing buyback of shares require shareholders approval by way of a special resolution passed through postal ballot and the company will be taking necessary measures to comply with the requirement.

The approval will be valid for 12 months from the day of passing of the resolution for carrying out the buyback.

During the financial year ended March 31, 2001 Tata Chemicals reduced its debt from Rs 1,370 crore to Rs 1,146 crore in a debt restructuring exercise.

The company also has a healthy debt equity ratio of 0.58:1 which places it in a comfortable position to raise additional resources if required, analysts said.