This is regarding KIOCL Ltd. Their total outstanding shares are 62,19,25,565 and in that 61,60,51,204 shares (99.1%) with promoters (GOI). The remaining shares with public are around 58.74 lakhs.
Now the company came up with share buy back plan of 1.41 crore shares. How is is possible ? Since only 58.74 lakhs shares with public. Could someone clarify please?. The CMP of share is 130 and buy back plan in 110 rupees.
Does that mean promoters participating in share buy back and they will sell their own shares to company? I mean how does it works.? Where does the money go? What is the point doing this? How it stands for a minority investor? My doubts are more general not just related to KIOCL.
Thanks a lot.
NB: If similar topics are already discussed please tag me or pass me the links. I will delete this question.
Hey There… it is possible because even promoters can participate in buybacks and tender their shares
Thanks Swapnil for your response. How does that affects the holdings of promoter? Will that remain unchanged after exercising the buy back?
The shares bought back by the company should be written off. So number of shares in circulation will reduce. So every shareholders ownership value on the company will increase.
By buying back shares of promotors, they get liquidity and this action increases the value of their remaining shares also.
It’s beneficial for all shareholders.
Company can increase their per share value either by earning more or by reducing number of shares in circulation. Depending on situation they choose any of this. (of course it’s applicable to cash rich ones)
I guess KIOCL is a PSU, making pellets from Iron ore. Instead of OFS govt announced buyback. Since promoter will participate in it and buyback price is less than CMP entire quantity will be tendered by govt. So they will indirectly reduce there shareholding.
I don’t see any thread for KIOCL here. Is it good company? worth investigating?
Logically govt shareholding should not be more than 75%. At almost 99% is currently held by GOI, so price discovery is not there. May be that is the reason govt is doing buyback instead of OFS.
Mind you Pellet prices are at record levels, you can see JSPL which are having pellet plant are doing good operationally.