As many as 17 listed companies have completed their share buyback plans this year and repurchased stocks worth about Rs 500 crore, representing little over half of their collective targets.
Going by data available with market regulator Sebi, these 17 firms had targeted to infuse Rs 916.53 crore to buy out shares from the public shareholders through open market route on the stock exchanges.
Together, these companies utilised a total amount of Rs 494.42 crore or 54 per cent of the targeted funds planned for the purpose.
In the process, these companies have bought 7.30 crore shares out of nearly 12 crore that were on offer for buyback.
Buyback involves purchase of outstanding public shares by a company in order to reduce the number of shares in the market.
The largest buyback included that of JBF Industries which spent nearly 99.63 per cent of the Rs 73.50 crore it had fixed under its buyback plan. The diversified business conglomerate had begun its buyback programme on September 4 and closed it on September 27, 2013.
Two other firms, SMS Pharmaceuticals and Zen Technologies, were also able to complete their buyback plans within a few months of launching it in 2013.
Other major buyback deal was that of Sasken Communication Technologies that used 76.6 per cent or Rs 66.26 crore to repurchase as many as 52 lakh shares. The company had sought to attain a maximum buyback of 58 lakh shares.
Besides, JK Lakshmi Cements (repurchase of 31.25 per cent of total target), Kanoria Chemical and Industries (98 per cent), Zee Entertainment Enterprises (21 per cent) and Kirloskar Oil Engines (21.3 per cent) were some of the companies that ended their share repurchase schemes in 2013.
At present, companies can buyback shares in two way – 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.
In August this year, Securities and Exchange Board of India (Sebi) introduced new buyback norms under which it will be mandatory for companies to repurchase at least 50 per cent of their offers.
Moreover, the companies are now required to complete their buyback offers within six months as against 12 months allowed earlier.
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 per cent on the funds lying in the escrow account.