KPR Mill Ltd, one of the largest vertically integrated apparel manufacturing companies in the country, has withdrawn its buyback proposal of Rs 263 crore after the government last week imposed an additional tax of 20 per cent in case of repurchase of shares by Indian listed companies.
"We have today filed with SEBI our communication conveying that the increase in the amount of buyback obligation due to the tax proposal in the Finance Bill 2019 was neither contemplated nor prevailing at the time of the consideration and the approvals of the board and shareholders," it said in a statement.
KPR becomes the first company to cancel its buyback post the Budget announcement of buyback tax extended to listed public companies. The government's view is to discourage the practice of avoiding dividend distribution tax through buyback of shares by listed companies.
On April 30, KPR Mill had announced plans to buy back 3,750,784 equity shares representing 5.17 per cent of the total number of equity shares in the paid-up share capital of the company at a price of Rs 702 a piece for a consideration not exceeding Rs 263.31 crore.
"We are not permitted to meet the buyback obligations beyond the amount approved by the board of directors and shareholders of the company and the same can also be effected only with the borrowed funds, which is prohibited by law. In the above circumstance, we are unable to file the Letter of Offer and go forward with the proposal, which has been intimated to SEBI," KPR Mill said in the statement.
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