Finolex Cables Ltd has decided to buy back its shares at an indicative price of around Rs 450-500.
Industry sources said that the Finolex Cables' board met on July 12 and decided to put up the buyback proposal at its annual general meeting on September 7, 1999.
A special committee has been set up under six directors to look at the various options of implementing buyback. The committee will look into various factors including the market conditions, quality of the scrip in the market, political and economic conditions, and the future projections of the company, sources said.
A senior company official confirmed the plans of buyback of shares. However, he declined to comment further on the matter as it was price-sensitive.
The company is in the process of selecting a merchant banker for charting out the modalities of the matter.
The company has initiated discussions with leading merchant bankers JM Capital Markets and Strategic Capital Corporation and is close to appointing a merchant banker, according to top level sources.
Sources said Strategic Capital Corporation is close to clinching the deal and a decision in this regard will be taken soon.
The promoters, including corporate bodies, hold around 43 per cent, institutions hold around 22.5 per cent, the public holds 26 per cent and 8 per cent stake is held by foreign institutional investors.
As per the buyback agreement, the company can buy up to 10 per cent of its shares from the public. If the company buys out the 10 per cent prescribed limit, the promoters will have majority control in the company.
The Finolex scrip on Wednesday saw a trading volume of 1,57,805 on the BSE with the share touching a high of Rs 413.25. The scrip was hovering at around Rs 413.25 for the past one week.
The company has reported a 246 per cent jump in net profit at Rs 12.2 crore during the first quarter of the current fiscal ending June as against the previous Rs 3.5 crore. The company turnover rose by 70 per cent to Rs 10 1.6 crore against the previous Rs 60.1 crore.
