K P R Mill was down 1.78% to Rs 597.20 at 10:12 IST on the BSE after the company announced withdrawal of the proposed offer to buyback 37.50 lakh equity shares.
The announcement was made after market hours yesterday, 11 July 2019.
Meanwhile, the S&P BSE Sensex was down by 50.39 points, or 0.13% to 38,772.72.
On the BSE, 19,000 shares were traded in the counter so far compared with average daily volumes of 1325 shares in the past two weeks. The stock had hit a high of Rs 598.50 and a low of Rs 570.05 so far during the day. It hit a 52-week high of Rs 711.25 on 6 September 2018 and a 52-week low of Rs 512.95 on 14 January 2019.
K P R Mill said that the buyback offer has been withdrawn owing to the increase in the amount of buyback obligation due to the tax proposal in the Finance Bill 2019, which was neither contemplated nor prevailing at the time of the consideration and the approvals of the board and shareholders.
The company said that it is 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 order to discourage the practice of avoiding dividend distribution tax (DDT) through buyback of shares by listed companies, the government, in the Union Budget on 5 July 2019, proposed that listed companies shall be liable to pay an additional 20% tax for buyback of share, as is the case currently for unlisted companies.
Forty-four companies announced or closed their buybacks after 1 April 2019. Of the Rs 26562.69-crore proposed outgo from companies, investors have received Rs 3033.58 crore.
On a consolidated basis, K P R Mill's net profit rose 17.6% to Rs 85.94 crore on a 14.7% rise in the net sales to Rs 913.84 crore in Q4 March 2019 over Q4 March 2018.
K P R Mill is one of the largest vertically integrated apparel manufacturing companies in India producing yarn, knitted grey & dyed fabric and ready made garments.
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