Buyback offers by 17 companies are currently in the market to repurchase shares worth over Rs 2,200 crore, but six of them would need to complete their respective offers before May because of tighter Sebi norms.
Sebi imposed a six-month time limit on listed firms for completing share buyback plans in August last year, since then six offers worth over Rs 1,400 crore have been launched.
However, 11 other offers were launched before these new guidelines came into effect and therefore they have got 12-month time periods to complete their buybacks.
As per details available with the BSE and Sebi, six firms that have launched their offers under the new guidelines are The Great Eastern Shipping Company, Jindal Steel & Power, eClerx Services, Nitin Fire Protection, Garware-Wall Ropes and Alliance Integrated Metaliks.
These six firms together have planned to spend Rs 1,411.23 crore to repurchase over six crore shares from their respective public shareholders in the open market.
The offers by other 11 companies, which launched their buyback plans in early 2013 before new norms were set in place, are also continuing as the time limits for them are 12 months. These firms will buyback stocks worth about Rs 873.7 crore and will complete their offers by up to June, 2014.
These include HT Media, S Mobility and Aptech Ltd.
Among all these 17 companies, the largest buyback is by Jindal Steel which plans to infuse up to Rs 1,000 crore under its buyback plan. The company had begun its buyback programme on September 9, 2013 and will close it on March 15, 2014.
The Great Eastern Shipping Company (maximum repurchase amount of Rs 279 crore) and eClerx (Rs 40.50 crore) will complete their buyback offer next month.
Gradiente Infotainment was the first company in 2014 to complete its buyback plan. The company, which ended its offer on January 2, utilised a Rs 6.09 lakh against maximum of Rs 4 crore targeted for the purpose.
Buyback involves purchase of outstanding public shares by a company in order to reduce the number of shares in the market.
Presently, companies can buyback shares in two ways -- open market and tender offer.
In an open market offer, firms can buyback shares from shareholders without knowing the buyer, while tender offer involves the company writing to its shareholders individually to know their willingness for sale of shares in the buyback.
As per the new buyback norms, it will be mandatory for companies to repurchase atleast 50 per cent of their offers.
Those not able to meet the target will be barred from launching another offer for a period of one year while they could also be imposed with a penalty amounting to maximum of 2.5 percent on the funds lying in the escrow account.
