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Welspun Corp Limited Buyback – Review, Offer Details, Price, Dates & more

In this article, we will discuss the Welspun Corp Limited Buyback offer, buyback price, buyback size, record date, company financial, buyback necessity and its impact on the company.

Welspun Corp Limited Buyback Details

Buyback TypeTender Offer
Buyback Opening Date
Buyback Closing Date
Buyback Offer AmountRs. 3,900 Million
Buyback No. of Shares28,888,888
Face ValueRs. 5/-
Date of Buyback ApprovalJune 22, 2019
Date of Public AnnouncementJuly 3, 2019
Buy Back Price Rs. 135/-
Buy Back Premium9.25%

Welspun Corp Buyback Opening and Closing Date

The starting and closing dates of this buyback are NA.

Welspun Corp Buyback Cash Offer

The Cash Offer to Buy-back up to 28,888,888 (Twenty Eight Million Eight Hundred Eighty-Eight Thousand Eight Hundred Eighty-Eight) fully paid-up equity shares of the Company of face value of Rs. 5 each.

Welspun Corp Buyback Record Date

The decided record date is Friday, July 5, 2019.

Welspun Corp Buyback Price

At a price of Rs. 135/- (Rupees One Hundred Thirty FiveOnly) per Equity Share.

Welspun Corp Buyback Size

The Buyback is for an aggregate amount not exceeding Rs. 3,900 Million (Rupees Three Thousand Nine Hundred Million only).


Welspun Corp 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%20013527000-1800-1.25%
40%40013554000-3600-2.50%
60%60013581000-5400-3.75%
80%800135108000-7200-5.00%
100%1000135135000-9000-6.25%

Profit is calculated from 5th July 2019 share price i.e. Rs.144 per share of Welspun Corp Limited.

According to the above table, if a shareowner applies for 1000 shares of Welspun Corp Limited & gets 20% acceptance from the company, the owner of this 1000 shares will sell 200 shares @ Rs.135 per share & receive Rs.(-1800) as profit amount & -1.25% 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.135 & receive a profit of Rs.(-5400) @ -3.75% profit percentage.


Welspun Corp Limited Buyback Overview

Welspun Corp Limited BuybackThe Company is into the business of manufacturing large-diameter steel pipes, plates & coils and coating of pipes globally, offering a one-stop solution for all line pipe related requirements with its wide range of high grade products.

The pipes, produced at advanced state-of-the-art global manufacturing facilities in India, USA, and Saudi Arabia for Longitudinal (LSAW), Spiral (HSAW) and ERW / HFIW, meet stringent specifications.


Company Finances – Welspun Corp Limited

The brief audited consolidated financial information of the Company for the last three financial years are provided below:

(Rs in Lakhs)

ParticularsMarch 31,
2019
March
31, 2018
March 31,
2017
Audited
Total Income90,881.2464,921.1562,600.65
Total Expenses83,803.9157,820.0255,230.51
Finance Cost1,773.711,701.532,357.14
Depreciation and Amortization expense2,597.332,581.563,860.80
Profit/(Loss) before Tax1,820.971,958.90359.19
Provision for Tax
(including Deferred Tax)
1,222.55202.14258.04
Profit/(Loss) after Tax(216.51)1,530.09101.15
Equity share capital1,326.131,326.11,326.13
Other Equity1,326.131,326.11,326.13
Less: Other Comprehensive Income
Net worth27,925.7729,106.4329,229.76
Total Debt13,046.9813,864.2918,429.78

Welspun Corp Limited Buyback Dates

Date of the Board meeting held to approve the proposal for Buy-back of Equity SharesMay 15, 2019, Wednesday
Date of publication of Public Announcement for the Buy-backJune 26, 2019, Wednesday
Record Date for determining the Buy-back Entitlement and the Eligible ShareholdersJuly 5, 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 Welspun Corp Limited Buyback

Buyback is a more efficient form of returning surplus cash to the Shareholders of the company, inter-alia, for the following reasons:

  • Share buyback is the acquisition by a company of its own Equity Shares. The Buyback will help the Company to return surplus cash to its Members holding equity Shares broadly in proportion to their shareholding, thereby, enhancing the overall return to the Shareholders;
  • The Buyback, which is being implemented through the Tender Offer route as prescribed under the Buyback Regulations, would involve allocation of a higher number of Equity Shares as per their entitlement or 15% of the number of Equity Shares to be bought back, reserved for the small shareholders. The Company believes that this reservation for small shareholders would benefit a large number of public shareholders, who would get classified as “small shareholders”;
  • This Buyback may help in improving return on equity, by reduction in the equity base, which may consequentially lead to a long term increase in shareholders’value; and
  • The Buyback gives an option to the Shareholders 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 not to participate and enjoy a resultant increase in their percentage shareholding, post the Buyback, without any additional investment.

Impact of Welspun Corp 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.

Assuming response to the Buyback is to the extent of 100% from all the Shareholders up to their entitlement the aggregate shareholding and the voting rights of the Promoters and Promoter Group of the Company, may increase from the existing 48.98% holding in the total equity capital and voting rights of the Company.

Response to the Buyback is to the extent of 100% from all the Shareholders up to their entitlement the aggregate shareholding of the public in the Company shall decrease to [•]% post Buyback from the current pre Buyback shareholding of 51.02%.

The debt-equity ratio post Buyback will be compliant with the permissible limit of 2:1 prescribed under Section 68(2)(d) of Companies Act, even if the response to the Buyback is to the extent of 100% from all the Eligible Shareholders upto their Buyback Entitlement.

Salient financial parameters consequent to the Buyback based on the audited standalone and consolidated financial
statements for the half year ended on September 30, 2018, are as under:

ParametersBased on Standalone Financial StatementsBased on Consolidated Financial Statements
Pre BuybackPost BuybackPre BuybackPost Buyback
Net Worth (Rs in Lakhs)16,370.0912,470.0927,925.7724,025.77
Profit/(Loss) (Rs in
Lakhs)
Return on Net Worth %(11.96%)(15.69%)(0.78%)(0.90%)
Earnings Per Equity Share (Basic) (in Rs)(10.45)(11.73)(0.50)(0.92)
Book Value per share (in Rs)61.7252.76105.29101.66
Price Earnings (PE) Multiple
Debt/ Equity ratio0.460.600.470.54

Basis of Calculating Welspun Corp Buyback Price

The Buyback Price has been arrived at after considering various factors including, but not limited to the trends in the market prices of the Equity Shares on the Stock Exchanges where the Equity Shares are listed, the net worth of the Company, price-earnings ratio, impact on other financial parameters and the possible impact of Buyback on the earnings per Equity Share.

More on Welspun Corp Buyback Price Calculation

The Buyback Price of Rs. 135/- (Rupees One Hundred Thirty Five only) per Equity Share represents a discount of 3.57% and 3.81% over the closing market price of the Equity Shares on the BSE and on the NSE respectively, as on May 9, 2019, being the date on which the Company intimated the Stock Exchanges of the date of the meeting of the Board wherein proposal of the Buyback was to be considered.

Further, the Buyback Price represents a premium of 9.25% and 9.26% over the average closing market prices of the Equity Shares on BSE and on NSE, respectively, during the three months preceding May 9, 2019, being the date on which the Company intimated the Stock Exchanges of the date of the meeting of the Board of Directors, wherein the proposal of the Buyback was to be considered.


Source of Funds for the Buyback

The funds for the Buyback will be sourced from internal accruals. The Company has confirmed that funds for Buyback will be available from cash balances and/or liquidation of financial instruments and/or other sources available with the Company as permitted by the Buyback Regulations.

The Company shall transfer from its free reserves 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 statement. The funds borrowed, if any, from banks and financial institutions, will not be used for the Buyback.


Welspun Corp Limited – Manager to the Buyback

AXIS CAPITAL LIMITED
Address: 1stFloor, Axis House,
C-2 Wadia International Centre, P.B. Marg,
Worli, Mumbai – 400025
Phone:+91 22 4325 2183
Fax:+91 22 4325 3000
Contact Person:Mr. Sagar Jatakiya
Website:www.axiscapital.co.in
SEBI Registration Number:INM000012029

Welspun Corp Limited – Registrar to the Buyback

Link Intime India Private Limited

Address: C-101, 1st Floor, 247 Park, L.B.S.
Marg, Vikhroli (West), Mumbai 400 083,
Maharashtra, India
Contact Person: Mr. Sumeet Deshpande
Phone: +91 22 4918 6200
Fax: +91 22 4918 6195
SEBI Registration Number:INR000004058

Welspun Corp Limited Contact Details

Company Contact Details
Welspun Corp Limited

CIN: L27100GJ1995PLC025609
Registered Office: Welspun City, Village Versamedi, Taluka Anjar,
District Kutch, Gujarat – 370 110, India.
Corporate Office: Welspun House, 5th
Floor, Kamala City, Senapati Bapat Marg, Lower Parel (West), Mumbai – 400 013, Maharashtra, India.
Tel.: +91 22 6613 6000; Fax: +91 22 2490 8020; E-mail: [email protected]; Website: www.welspuncorp.com

 


Welspun Corp Limited Buyback News

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


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