This document discusses various methods of share repurchase by companies, including open market purchases, fixed price tender offers, Dutch auctions, and selective buybacks. It provides a case study of Berger Paints' share buyback program in 2005, where the company offered to purchase up to 3098333 shares at a maximum price of Rs. 60 per share. The buyback had a positive impact on the company's earnings per share and shareholder value. Restrictions on buybacks under Indian law are also outlined, as well as some examples of major buyback programs by companies like Reliance in the future. In conclusion, the document states buybacks should only be used to exit a company when its prospects are uncertain or

1. PRESENTED BY-NIRAJ SAH

4.  1. Open market share purchase:
--95% of repurchase is done through this
method
--Daily re-purchase of shares from market is
limited
--The company may not openly announce that it
will re-purchase shares from open market

5. Fixed price tender offer
 Single purchase price and
number of shares sought
are mentioned.
 Person would like to sell
to the company should
come with offer of the
price and number of
shares that he offers to
the company.
 The fixed price is usually
set at a premium above
the current market price.

6. 3. Dutch auction share repurchases

7. 4.Equal access buy-backs
 All share holders have given equal
opportunity to sell shares to the
company.

8. 5.Selective buy-backs
 In broad terms, a selective buy-back is one in
which identical offers are not made to every
shareholder, for example, if offers are made to
only some of the shareholders in the company.
The scheme must first be approved by all
shareholders, or by a special resolution
(requiring a 75% majority) of the members in
which no vote is cast by selling shareholders or
their associates. Selling shareholders may not
vote in favour of a special resolution to approve
a selective buy-back

9. on-market buy-backs and
minimum holding buy-back
 A listed company may also buy back its shares
in on-market trading on the stock exchange,
following the passing of an ordinary
resolution.The stock exchange’s rules apply to
on-market buy-backs.
 A listed company may also buy unmarketable
parcels of shares from shareholders (called a
minimum holding buy-back). This does not
require a resolution but the purchased shares
must still be cancelled.

10. CASE STUDY : : BERGER PAINTS
CASE STUDY BERGER PAINTS

11.  17 December, 1923- Started
 Presently Dhingra , their relatives and
companies controlled by them,
currently hold 73.53% of the paid-up
capital of the Company.
 Profit making company having an
uninterrupted dividend record since
1981.

12. OBJECTIVE
 To provide an exit opportunity to
those shareholders who so desire
 In a manner that does not
substantially impact the market price
of the Company’s shares, has been
made
 This is expected to enhance the EPS
of the Company in future and create
long-term share value.

13. THE OFFER AND PRICE

14. • The number of equity shares bought back
would depend upon the average price paid
for the equity shares bought back.
 maximum offer price = Rs. 60/- per
equity share
 aggregate consideration amount=Rs.1859
lakhs
 maximum number of shares = 3098333
equity shares
 aggregating=1.56% of the total paid up
equity shares as on 29 April 2005.

15.  The aggregate shareholding of the promoters
as on 29 April 2005 is 146543273 equity
shares constituting 73.53 % of the listed
share capital of the Company.
 Share purchased - 1009924 equity shares
 The maximum purchase price - Rs. 37.00 on
2 February, 2005
 The minimum purchase price was Rs. 30.75
on 9 November, 2004
 Shares Sold - 89620 equity shares
representing inter se sale among promoters
only.

16. IMPACT
• The buy-back had not impaired the
growth of the Company and also
contributes to the overall
enhancement of shareholder value.
• Generated sufficient cash flows to
meet the requirements of the present
business and to its stakeholders.
• The debt equity = 2:1

18. Restriction’s On Buyback
A special resolution has to be passed in general meeting of the
shareholders.
Buyback should not exceed 25% of the total paid-up capital and free
reserves.
A declaration of solvency has to be filed with SEBI and Registrar Of
Companies.
The shares bought back should be extinguished and physically destroyed.
The company should not make any further issue of securities within 2
years, except bonus, conversion of warrants, etc.

19. Effect of Buy Back on Stock Exchange

20. Contradicting sections on Buy-
back of shares in India
 Section 77 of the Companies Act does not
allow a company to buy its own shares until
the winding up of companies.
 But the subsequent Section 77A permits
buyback subject to certain conditions.

21. Section-77 of the Companies
Act
 Most of the sections in the Companies Act tries
to protect the interest of the outsiders who had
lent money in the form of debentures or loans
or deposits by restricting company not to pay
unless outsiders(loan vendors) are paid fully.
 Share holders are paid last and has taken
maximum risk in the company.

22. Buy Back Of Reliance Energy 2008
Mr. Anil Ambani (Reliance Energy) bought back
6,50,000 equity shares of the company in the
morning on Tuesday at nearly Rs.1,279.23/share
aggregating Rs.831.5 million.
Amounting 10 % the company`s equity and free
reserves.
Reason:- To increase the price of its shares.
Result:- At noon Friday, shares of the company
were trading at Rs.1,310 up by Rs.28.20 from its
previous close at the BSE.

23. Buy Backs in Future
 Reliance Industries, 12 crores shares
worth Rs 10,440 crores.
 JP Morgan chase and co, 370 million
shares worth $15 billion
 Apple, shares worth $10 billion
following the end of fourth qtr.

25. CONCLCONCLUSION
USION CONCLUSION
 Buybacks should be used as an
opportunity to exit only when there is
concern over a company’s prospects
or when the post-buyback free float is
expected to shrink considerably. In
most other cases, buybacks do offer
the lure of an immediate benefit–but
you might be better off as a residual
shareholder, and gain from a hike in
the share of assets and profits of the

26. PRESENTED BY-NIRAJ & SISHIR,
FF1