Bosch board approves R2,000-cr buyback plan

THE Bosch board on Friday approved a proposal to buy back shares worth R2,019.7 crore from investors, reports fe Bureau in Mumbai. The auto parts maker proposes to buy back 8.78 crore shares at a price of R23,000 apiece, it said in a stock exchange filing. The price is at a 1.8% premium to the stock’s closing price on Friday. Shares of Bosch ended the week at R2,2603.3 apiece on the BSE or 0.15% lower than the previous closing. ■

Mumbai, July 1: The board of directors of auto parts maker Bosch on Friday approved a proposal to buy back shares worth Rs 2,019.7 crore from investors.

The company proposes to buy back 8.78 crore shares at a price of Rs 23,000 apiece, it said in a stock exchange filing. The price is at a premium of 1.8% to the stock's closing price on Friday. Shares of Bosch closed at Rs 2,2603.3 on the BSE, down 0.15%.

As per Bloomberg data, Bosch has Rs 1,831 crore of cash & equivalents on it books as on March 31, 2016. The buyback would constitute 2.79% of the paid-up capital of the company. As per the latest shareholding data on the BSE, the promoters hold 71.18% stake in Bosch, while domestic institutions own 9.34%. Foreign investments constitute 7.69% stake as of March 2016.

The Securities and Exchange Board of India (Sebi) amended the buyback rules in 2013, specifying that the minimum amount that a company is required to buy back should be 50% of the offer size, against the earlier practice of 25%.

Sebi also limited the buyback period to six months from the time the approval has been sought from the board or shareholders,becauseitfound that companies typically did not utiilise the entire period of one year to complete buyback.

Buyback activity has picked up during calendar 2016 as management of corporates whose stocks are trading at reasonable valuations and have surplus cash on books are opting for buybacks.

According to Prime Database, announcements have been made for buying back shares worth Rs 2,220 crore so far in 2016. In FY15, the total value of shares bought back was Rs 650 crore.

Pharma company Novartis announced last month that it will buy back shares worth 290 crore from investors at a price of Rs 760 apiece, an 11% premium to the three-month weighted average share price of the stock. Currently, the promoter of the pharmaceutical company -- Novartis AG -- holds 75% of outstanding equity in the Indian subsidiary.

State-owned National Aluminium Company (Nalco) recently announced buyback of shares amounting to Rs 2,834 crore. The share buyback will help the government raise funds for meeting its divestment target for FY17.

Nalco has fixed the buyback price at Rs 44 per share and the government may garner at least Rs 2,294 crore as it is expected to sell close to 25% of its holding.

State-owned Bharat Heavy Electricals (BHEL) and Coal India will be the next in line among public sector companies to announce buybacks. BHEL has cash reserves of Rs 10,198 crore at the end of the previous financial year.

Coal India is likely to buy back 5% of the government stake in the company, according to media reports.