In this article, we will discuss the Star Cement Limited Buyback offer, buyback price, buyback size, record date, company financial, buyback necessity and its impact on the company.
Star Cement Limited Buyback Details
|Buyback Type||Tender Offer|
|Buyback Opening Date|
|Buyback Closing Date|
|Buyback Offer Amount||Rs. 102,00,00,000/-|
|Buyback No. of Shares||68,00,000|
|Face Value||Rs. 1/-|
|Date of Buyback Approval||June 21, 2019|
|Date of Public Announcement||June 25, 2019|
|Buy Back Price||Rs. 150/-|
|Buy Back Premium||20.39%|
Star Cement Buyback Opening and Closing Date
The starting and closing dates of this buyback are NA.
Star Cement Buyback Cash Offer
The Cash Offer to Buy-back up to 68,00,000 (Sixty Eight Lakhs Only fully paid-up equity shares of the Company of face value of Rs. 1 each.
Star Cement Buyback Record Date
The decided record date is Friday, July 05, 2019.
Star Cement Buyback Price
At a price of Rs. 150/- (Rupees One Hundred Fifty only) per Equity Share.
Star Cement Buyback Size
The Buyback is for an aggregate amount not exceeding Rs. 102,00,00,000/- (Rupees One Hundred Two Crores Only).
Star Cement Buyback Acceptance Ratio
Find profit & profit percentage based on various acceptance rate, The profit is calculated based on 1000 shares.
|Acceptance Ratio||Total Shares Accepted||Buyback Price||Buyback Amount||Profit||Profit%|
Profit is calculated from 4th July 2019 share price i.e. Rs.120 per share of Star Cement Limited.
According to the above table, if a shareowner applies for 1000 shares of Star Cement Limited & gets 20% acceptance from the company, the owner of this 1000 shares will sell 200 shares @ Rs.150 per share & receive Rs.6000 as profit amount & 5.00% 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.150 & receive a profit of Rs.18000 @ 15.00% profit percentage.
Star Cement Limited Buyback Overview
The Company is engaged in the business of manufacturing of cement and cement clinker. One integrated plant is located in the State of Meghalaya and another Cement Grinding Unit is situated at Sonapur, Guwahati in the State of Assam. The Present capacity cement of both the plants is 3.0 MTPA.
Star Cement mainly concentrate its business in North Eastern and Eastern part of the Country and a leading brand in the Region. During last two decades of experience, the Company has emerged its strong position in North-Eastern India on the back of prudent locational advantages, timely availability of raw materials, pro active capacity expansion programming and consistent brand positioning.
Company Finances – Star Cement Limited
The salient Financial Information of the Company as extracted from the standalone Audited financials of the Company is given below:
(Rs in Lakhs)
|Depreciation and Amortization||4,648.77||5,745.45||4,035.36|
|Profit/(Loss) before Tax||28,036.77||22,783.95||8,609.07|
|Profit/(Loss) after Tax||–||–||–|
|Equity share capital||4,192.29||4,192.29||4,192.14|
|Less: Other Comprehensive Income||1,00,295.05||79,009.19||57,931.54|
|Debt (including working capital)||15,715.87||42,785.65||62,183.89|
Star Cement Limited Buyback Dates
|Date of the Board meeting held to approve the proposal for Buy-back of Equity Shares||June 21, 2019, Friday|
|Date of publication of Public Announcement for the Buy-back||June 25, 2019, Tuesday|
|Record Date for determining the Buy-back Entitlement and the Eligible Shareholders||July 05, 2019, Friday|
|Buy-back opens on / Buy-back Opening Date|
|Buy-back closes on / Buy-back Closing Date|
|Last date of verification by Registrar to Buy-back|
|Last date of intimation to the Stock Exchange regarding acceptance or non-acceptance of tendered Equity Shares by the Registrar and Manager to the Buy-back|
|Last date of settlement of bids on the Stock Exchange|
|Last date of return of unaccepted demat shares by Stock Exchange to Seller Member / Broker|
|Last date of extinguishment of Equity Shares bought back|
Necessity of Star Cement Limited Buyback
Buyback is a more efficient form of distributing surplus cash to the shareholders holding equity shares of the Company, inter-alia, for the following reasons:
- The 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 to shareholders
- Buyback, which is being implemented through the Tender Offer route as prescribed under the Buyback Regulations, would involve allocation of 15% of the outlay to small shareholders. The Company believes that this reservation of 15% for small shareholders would benefit public shareholders, who would get classified as “Small Shareholder”
- It would help in improving return on equity, by a reduction in the equity base, thereby leading to long term increase in shareholders’ value
- Buyback gives an option to the shareholders holding equity shares of the Company, who can choose to participate and get cash in lieu of equity shares to be accepted under the Buyback Offer or they may choose to not participate and enjoy a resultant increase in their percentage shareholding, post the Buyback Offer, without additional investment
- The Buyback will help in optimizing the capital structure.
Impact of Star Cement Limited Buyback on the Company
The Company believes that the Buyback is not likely to cause any material impact on the profitability/earnings of the Company. Except a reduction in the investment income, which the Company could have otherwise earned on the amount distributed towards Buyback.
Assuming the response to the Buyback is 100% (full acceptance) from all the Eligible Sellers in proportion to their respective Buyback Entitlement, the aggregate shareholding of the Promoter and Persons in Control post the Buyback may increase/decrease to [●] from 67.94% prior to Buyback.
Response to the Buyback is 100% (full acceptance) from all the Eligible Sellers in proportion to their respective Buyback Entitlement, the aggregate shareholding of the Equity Shareholders other than Promoter and Persons in Control, post the Buyback may increase/decrease to [●] from 32.06% prior to Buyback.
The debt-equity ratio post buyback will be compliant with the permissible limit of 2:1 prescribed by the Companies Act, even if the response to the buyback is to the extent of 100% (full acceptance).
Salient Financial Parameters consequent to the Buyback based on the latest Standalone audited results as on March 31, 2019 are as under:
|Parameters||Based on Standalone Financial|
|Pre Buyback||Post Buyback|
|Net Worth (Rs in Lakhs)||1,04,487.34||94,287.34|
|Profit/(Loss) for the period (Rs in Lakhs)||–||–|
|Return on Net Worth %||24.49%||27.14%|
|Earnings Per Equity Share (EPS) (Basic) (in Rs)||6.10||6.20|
|Book Value per share (in Rs)||24.92||22.86|
|Price Earnings (PE) Multiple||20.01||19.69|
|Debt/ Equity ratio||0.15||0.17|
Basis of Calculating Star Cement Buyback Price
The Buyback Price represents a premium of 37.21% over the volume-weighted average market price of the Equity Shares on the NSE for 3 months preceding the date of the intimation of the Board Meeting i.e. June 18, 2019, which was Rs. 109.32 and 20.39% over the volume-weighted average market price of the Equity Shares on the NSE for 2 weeks preceding the date of the intimation of the Board Meeting i.e. June 18, 2019, which was Rs.124.60.
More on Star Cement Buyback Price Calculation
The closing market price of the Equity Shares as on the date of the intimation of the Board Meeting i.e. June 18, 2019, was Rs. 118.15 on NSE and Rs. 117.80 on BSE.
Buyback Price is 6.02 times of the book value per Equity Share of the Company as on March 31, 2019, which was Rs. 24.92 per Equity Share based on standalone financial statements. The basic adjusted earnings per share of the Company pre buyback as on March 31, 2019, is Rs. 6.10 on a standalone basis, which will increase to Rs. 6.20, post buyback assuming full acceptance.
Source of Funds for the Buyback
The funds for the Buyback will be sourced from cash balances available with the Company and/or liquidation of financial instruments held by the Company. These funds have been generated through internal accruals. The Company does not intend to raise additional debt for the explicit purposes of the Buyback.
Accordingly, borrowed funds will not be used for the Buyback. However, the Company may borrow funds in the ordinary course of its business.
Star Cement Limited – Manager to the Buyback
|NARNOLIA FINANCIAL ADVISORS LIMITED|
201, 2ND Floor, Marble Arch
236B, A.J.C Bose Road, Kolkata – 700020
Tel No: (033) 4050 1500
Fax: (033) 4050 1549
Email: mgo[email protected]
Contact Person: Mr. Manav Goenka
SEBI REGN NO: INM000010791
Star Cement Limited – Registrar to the Buyback
|MAHESHWARI DATAMATICS PRIVATE LIMITED|
23 R. N. Mukherjee Road, 5th Floor
Tel No: (033) 22482248, 22435029
Fax: (033) 22484787
Email: [email protected]
Contact Person: Mr. S. Rajgopal
SEBI REGN NO: INR0000000353
Star Cement Limited Contact Details
|Company Contact Details|
|Star Cement Limited|
Regd. Office: Vill: Lumshnong, P.O.: Khaliehriat, Dist.: East Jaintia Hills, Meghalaya – 793210
Corporate Office: Satyam Towers, Unit No. 9B, 1st Floor, 3 Alipore Road, Kolkata – 700027
Phone No: (033) 24015556 Fax No: (033) 24015556
Website: www.starcement.co.in; E-mail: [email protected]: Company Secretary and Compliance Officer: Mr. Debabrata Thakurta
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