Mumbai, Sept. 18: The board of directors of Bombay Dyeing and Manufacturing Company Ltd will meet on September 24 to consider a proposal for a share buyback, the company's third.
This announcement led to the scrip rising by around 4 per cent in the stock exchanges today. There was a widespread selling across the board. The company shares opened at Rs 71.50 and shot to a day's high of Rs 74.80, after which it closed at Rs 74.35.
In August 2002 Bombay Dyeing had announced its second buyback programme which was routed through open market purchases. The company had then increased its offer price to a maximum of Rs 65 a share compared with Rs 60 in its first programme.
The second instance sought to buy back up to 25 per cent of the company’s paid-up share capital for an amount not exceeding Rs 31.98 crore.
Bombay Dyeing had said it had accumulated free reserves and satisfactory liquidity and since there was no immediate need for these funds, the buyback would provide an opportunity to return the surplus funds to shareholders and improve return on equity.
The move was also expected to enhance the earnings per share of the company and create a long-term shareholder value.
Through its first offer, the Nusli Wadia-owned textiles and petrochemicals major had repurchased over 18.26 lakh shares at an average price of Rs 40.70 per share.
Earlier this month, the company had unveiled ambitious plans for its textile division, which is a major contributor to its topline. Bombay Dyeing is now planning to have a dominant role in the market for its products in this division.
Last year, the company had acquired a stake in Proline India for over Rs 4 crore.