India Securities Ltd (ISL), a non-banking finance company of the Essar Group, has decided to buy back shares at face value as against the weighted average market price of Rs 3.75 per share and get delisted from all the regional stock exchanges except the Bombay Stock Exchange and National Stock Exchanges in a phased manner.
At the end of this exercise, which is expected to be completed by January 2002, the promoters' shareholding will go up from 62 per cent to 72 per cent.
The company, which has a paid-up capital of Rs 26 crore, has recently kicked-off the first phase of the buyback-cum-delisting exercise for shareholders from Karnataka. It intends to similarly buyback shares and delist from the New Delhi and Chennai stock exchanges. The buy back is expected to cost the promoters of the group, the Ruias, about Rs 1.66 crore.
A senior company official said, "The move behind the buyback and delisting is to save on costs like listing fees. Moreover, as majority of our shareholders are from Maharashtra. So, it makes sense to continue to be listed on BSE and NSE only. For shareholders from other regions, there is always the option of selling / buying the company's shares from either the BSE or NSE terminals of stock brokers in their areas."
Though the NBFC sector is currently plagued by high levels of delinquent assets, India Securities, which went public in 1992, intends to consolidate its existing portfolio of leasing and hire purchase businesses by making concerted efforts towards recoveries, he said.
India Securities has repaid about 97 per cent of its public deposits of Rs 45 crore, including debentures, and intends to pay off the balance Rs 70 lakh as and when the deposits mature.
