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 Type||Tender Offer|
|Buyback Opening Date|
|Buyback Closing Date|
|Buyback Offer Amount||Rs. 3,900 Million|
|Buyback No. of Shares||28,888,888|
|Face Value||Rs. 5/-|
|Date of Buyback Approval||June 22, 2019|
|Date of Public Announcement||July 3, 2019|
|Buy Back Price||Rs. 135/-|
|Buy Back Premium||9.25%|
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 Ratio||Total Shares Accepted||Buyback Price||Buyback Amount||Profit||Profit%|
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
The 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)
|Depreciation and Amortization expense||2,597.33||2,581.56||3,860.80|
|Profit/(Loss) before Tax||1,820.97||1,958.90||359.19|
|Provision for Tax|
(including Deferred Tax)
|Profit/(Loss) after Tax||(216.51)||1,530.09||101.15|
|Equity share capital||1,326.13||1,326.1||1,326.13|
|Less: Other Comprehensive Income||–||–||–|
Welspun Corp Limited Buyback Dates
|Date of the Board meeting held to approve the proposal for Buy-back of Equity Shares||May 15, 2019, Wednesday|
|Date of publication of Public Announcement for the Buy-back||June 26, 2019, Wednesday|
|Record Date for determining the Buy-back Entitlement and the Eligible Shareholders||July 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:
|Parameters||Based on Standalone Financial Statements||Based on Consolidated Financial Statements|
|Pre Buyback||Post Buyback||Pre Buyback||Post Buyback|
|Net Worth (Rs in Lakhs)||16,370.09||12,470.09||27,925.77||24,025.77|
|Profit/(Loss) (Rs in|
|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)||61.72||52.76||105.29||101.66|
|Price Earnings (PE) Multiple||–||–||–||–|
|Debt/ Equity ratio||0.46||0.60||0.47||0.54|
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
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,
Contact Person: Mr. Sumeet Deshpande
Phone: +91 22 4918 6200
Fax: +91 22 4918 6195
Email: [email protected]
SEBI Registration Number:INR000004058
Welspun Corp Limited Contact Details
|Company Contact Details|
|Welspun Corp Limited|
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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