Nestle: Reserves bonanza

STOCK IN THE NEWS

All eyes on January 15 when the boar of directors of the Nestle India will meet to consider a scheme formulated under Sections 391 to 394 of the Companies Act, 1956 read with Sections 100 to 102 of the Companies Act, 1956. Under this Act, the board will utilise part of the reserves of the company, for distribution to shareholders.

This triggered the speculation in the market that the company may offer a buyback to shareholders on January 15. The stock jumped 6.36 per cent to close at Rs 1245, with volumes rising three fold at 2.17 million shares.

For the current year thus far, the company has declared two interim dividends, Rs 2 a share in April 17 and Rs 18 a share on December 4.

Of the total equity capital of Rs 96.42 crore, the promoters hold 61.84 per cent. Including profit for the current year ending December 2006, the company has reserves of around Rs 400 crore. The non-promoters' market capitalisation was at Rs 4,500 crore.