Greaves Cotton Buyback Review, Offer Details, Price, Dates, Size & more

In this article, we will discuss about Greaves Cotton Limited Buyback offer, buyback price, buyback size, Greaves Cotton Buyback record date, company financial, buyback necessity and its impact on company.

Greaves Cotton Limited Buyback Details

Buyback TypeTender Offer
Opening DateOctober 18, 2019
Closing DateNovember 1, 2019
Buyback Offer AmountRs. 227.50 Cr
Buyback No. of Shares1.30 cr
Face ValueRs. 2
Date of Buyback ApprovalMay 2, 2019
Date of Public AnnouncementJune 26, 2019
Buy Back PriceRs. 175/-
Buy Back Premium5.32%%
Date of Board MeetingMay 2, 2019

Greaves Cotton Buyback Opening and Closing Date

The starting date is October 18, 2019 and closing date of this buyback is November 1, 2019.

Greaves Cotton Buyback Cash Offer

The Cash Offer to Buy-back up to 1,30,00,000 fully paid-up equity shares of the Company of face value of Rs. 2 each, representing 5.32% of the total number of equity shares.

Greaves Cotton Buyback Record Date

The decided record date is Friday, July 12, 2019

Greaves Cotton Buyback Price

At a price of Rs.175 per Equity Share.

Greaves Cotton Buyback Size

At a buyback price of Rs.175/- payable in cash for an aggregate consideration not exceeding Rs.2,27,50,00,000.

Greaves Cotton Limited Buyback Acceptance Query

You can check for Buyback Acceptance query here. Just click on the given link and it will redirect you to buyback acceptance query page.


Greaves Cotton Limited Buyback Acceptance Ratio

Find profit & profit percentage based on various acceptance rate, The profit is calculated based on 1000 shares.

Acceptance RatioTotal Shares AcceptedBuyback PriceBuyback AmountProfitProfit%
20%2001753500078005.74%
40%400175700001560011.47%
60%6001751050002340017.21%
80%8001751400003120022.94%
100%10001751750003900028.68%

Profit is calculated from 14th Oct 2019 share price i.e. Rs.136 per share of Greaves Cotton Limited.

According to the above table, if a shareowner applies for 1000 shares of Greaves Cotton limited & gets 20% acceptance from the company and the owner with 1000 shares will sell 200 shares @ Rs.175 per share & receive Rs.7800 as profit amount & 5.74% profit percentage on selling these 200 shares back to the company.

Similarly, if the owner gets 60% acceptance of share from the company, the owner will sell 600 shares @ Rs.175 & receive a profit of Rs.23400@ 17.21 % profit percentage.


Greaves Cotton Limited Buyback Overview

Greaves Cotton Limited (“Greaves Cotton” or the “Company”) an Indian company incorporated on December 29, 1945, is a leading global information technology, consulting and business process services company. The Company has over 1,70,000 dedicated employees serving clients across six continents.

The name of the Company was changed from Western India Vegetable Products Limited to Greaves Cotton Products Limited on June 7, 1977, and subsequently to Greaves Cotton Limited on April 28, 1984. Company has its registered office situated at Doddakannelli, Sarjapur Road, Bengaluru 560 035, India.

This Company shifted its registered office from the State of Maharashtra to the State of Karnataka on July 10, 1996. The Equity Shares of the Company were listed in the year 1995 on the NSE (Code: Greaves Cotton) and an application for listing of equity shares was filed with BSE in the year 1946-47 (Code: 507685). The ADRs of the Company were listed on NYSE (Code: WIT) in the year 2000. The ISIN Number of the Company is INE075A01022.


Company Finances – Greaves Cotton Limited

The salient financial information of the Company as extracted from the audited standalone financial statements for the three years ended March 31, 2019, March 31, 2018 and March 31, 2017 are as under:

[In Rs. Cr]

Particulars12 Months period ended March 31
(Audited)
201920182017
Total Income2,029.451,884.991,865.78
Total Expenses (excluding finance cost, depreciation & amortization)1,713.091,584.411,575.66
Interest
Depreciation and amortization expenses48.3352.3546.66
Profit before tax264.20247.42242.65
Provision for tax
(including Deferred Tax)
77.0392.9768.00
Profit /(Loss) after tax169.30202.62180.63
Equity Share Capital48.8448.8448.84
Other Equity920.32911.56872.13
Networth969.16960.40920.97
Total Debt (Excluding working capital loans)

Greaves Cotton Limited Buyback Dates

Date of Board Meeting approving the BuybackMay 2, 2019
Date of publication of Public Announcement for BuybackJune 26, 2019
Record Date for determining the Buyback Entitlement and the names of Eligible ShareholdersJuly 12, 2019
Buyback Opening dateOctober 18, 2019
Date of closing of BuybackNovember 1, 2019
Last Date of verification of Tender Forms by the RegistrarNovember 11, 2019
Last date of intimation regarding acceptance / non-acceptance of Tendered Equity Shares to the BSE Limited by the RegistrarNovember 11, 2019
*Last date of Settlement of Bids on the BSE LimitedNovember 13, 2019
Last date of return of unaccepted Equity Shares by BSE LimitedNovember 13, 2019
Last date of Extinguishment of Equity SharesNovember 20, 2019

Details of Public Announcement

The Company has made a Public Announcement dated June 26, 2019, in relation to the Buyback, which was
published on June 27, 2019 in the following newspapers, in accordance with Regulation 7 of the Buyback
Regulations, within 2 (two) working days from the date of declaration of results of the postal ballot for special
resolution i.e. June 25, 2019:

PublicationLanguageEdition
Business StandardEnglishAll
Business StandardHindiAll
Mumbai LakshadeepMarathiMumbai

Necessity of Greaves Cotton Limited Buyback

The Buyback is being undertaken for the following reasons:

  • Buyback will help the Company to distribute surplus cash to its shareholders holding Equity Shares broadly in proportion to their shareholding thereby enhancing the overall return for them;
  • The Buyback, which is being implemented through the tender offer route as prescribed under the Buyback Regulations, would involve a reservation of up to 15% of the equity shares, which the Company proposes to buyback, for small shareholders or the actual number of Equity Shares entitled as per the shareholding of small shareholders on the Record Date. Company believes that this reservation for small shareholders would benefit a significant number of the Company’s public shareholders, who would get classified as “Small Shareholders”;
  • The Buyback is generally expected to improve return on equity and improve earnings per share by reduction in the equity base of the Company, thereby leading to long term increase in shareholders’ value;
  • Buyback gives an option to the Eligible Shareholders to either (A) participate in the Buyback and
    receive cash in lieu of their Equity Shares which are accepted under the Buyback, or (B) not to participate
    in the Buyback and get a resultant increase in their percentage shareholding in the Company post the
    Buyback, without additional investment;
  • The Buyback will help in achieving an optimal capital structure.

Impact of Greaves Cotton Limited Buyback on the Company

The Buyback is not likely to cause any impact on the profitability or earnings of the Company, except to the extent of reduction in the amount available for investment, which the Company could have otherwise deployed towards generating investment income.

In the event that there is full acceptance of the Equity Shares tendered in the Buyback from Eligible Shareholders on a proportionate basis, the funds deployed by the Company towards the Buyback would be Rs 227.50 crore excluding transaction costs incurred or to be incurred for the Buyback. This shall impact the investment income earned by the Company, on account of reduced amount of funds available for investments.

The Buyback is not expected to impact growth opportunities for the Company. The Buyback will not result in a change in control or otherwise affect the existing management structure of the Company.

Salient financial parameters consequent to the Buyback based on the last audited standalone and consolidated financial statements of the Company for the financial year ended March 31, 2019 are as under:

Parameters (based on audited standalone financial statements for year ended March 31, 2018)Pre Buy-backPost Buy-back
(Assuming Full Acceptance)
Net worth (Rs in Cr)969.16741.66
Return on Net worth (%)17.55%19.89%
Earnings Per Share (Rs)6.937.32
Book Value per Share (Rs)39.6932.08
P/E as per the latest audited standalone financial statements20.1419.07
Total Debt / Equity Ratio

Basis of Calculating Greaves Cotton Buyback Price

The Buyback Price has been arrived at after considering various factors such as

  • The Equity Shares of the Company are proposed to be bought back at a price of Rs 175/- per Equity Share.
  • The trends in the volume weighted average prices and closing price of the Equity Shares on the Stock Exchanges where the Equity Shares of the Company are listed,
  • Net worth of the Company, and
  • The impact on the earnings per Equity Share.

More on Greaves Cotton Buyback Price Calculation

The Buyback Price represents:

(i) premium of 30.4% and 30.8% to the volume weighted average market price of the Equity Shares on the BSE and the NSE, respectively, during the 3 (three) months period preceding April 26, 2019, being the date of intimation to the Stock Exchanges regarding the date of the Board Meeting to consider the proposal of the Buyback (“Intimation Date”);

(ii) premium of 36.4% and 37.2% to the volume weighted average market price of the Equity Shares on the BSE and the NSE, respectively, during the 6 (six) months preceding the Intimation Date; and

(iii) premium of 24.9% and 24.7% over the closing price of the Equity Shares on the BSE and the NSE respectively, as on the Intimation Date.

The closing market price of the Equity Shares as on the Intimation Date was Rs 140.10 and Rs 140.30 on the BSE and the NSE respectively


Source of Funds for the Buyback

Assuming full acceptance, the funds that would be employed by the Company for the purpose of the Buyback of 1,30,00,000 Equity Shares at a price of Rs 175 per Equity Share the maximum amount required for Buyback will not exceed Rs 227.50 crore.

The funds for the implementation of the proposed Buyback will be sourced out of free reserves and securities premium of the Company and any other source as may be permitted by the Buyback Regulations or the Act. Borrowed funds from banks and financial institutions, if any, will not be used for the Buyback.

The funds for the implementation of the proposed Buyback will be funded from current balances of cash and cash equivalents, current investment and/or internal accruals of the Company.

The Company shall transfer from its free reserves or securities premium account, a sum equal to the nominal value of the equity shares bought back through the Buyback to the Capital Redemption Reserve account and details of such transfer shall be disclosed in its subsequent audited financial statements.


Greaves Cotton Limited – Manager to the Buyback

Ambit Capital Private Limited
Ambit House, 449, Senapati Bapat Marg,
Lower Parel, Mumbai – 400 013
Tel: +91 (22) 3043 3000; Fax: +91 (22) 3043 3100
Contact Person: Krishnakant Jaju
E-mail: gcl.buyback2019@ambit.co
Website: www.ambit.co
SEBI Registration Number: INM000012379
Validity Period: Permanent

Greaves Cotton Limited – Registrar to the Buyback

Karvy Fintech Private Limited
(Formerly known as KCPL Advisory Services Private Ltd)
Karvy Selenium Tower B Plot No 31 & 32, Financial District
Nanakramguda, Serilingampally Mandal, Hyderabad – 500032
Tel: +91 (40) 6716 2222; Fax: +91 (40) 2343 1551
Contact Person: M Murali Krishna
E-mail: GCL.buyback@karvy.com
Website: https://www.karvyfintech.com
SEBI Registration Number: INR000000221
Validity Period: Permanent

Greaves Cotton Limited Contact Details

Company Contact Details
GREAVES COTTON LIMITED
CIN: L99999MH1922PLC000987
Registered Office: Unit No. 701, 7th Floor, Tower 3, Equinox Business Park, LBS Marg,
Kurla West, Mumbai – 400 070, India
Phone: +91 (22) 62211700; Fax: +91 (22) 62217499;
E-mail: investorservices@greavescotton.com; Website: www.greavescotton.com
Contact Person: Mr. Atindra Basu, Company Secretary and Compliance Officer

 


Greaves Cotton Limited Buyback News

News 1 – Buyback PDF / Letter of Offer [Download]

News 2 – Greaves Cotton Ltd – Public Announcement


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