MUMBAI, MAR 28: The board of directors of scooter giant Bajaj Auto Ltd has decided to buy back upto 15 per cent of the paid-up share capital of the company (numbering approximately 1.80 million shares) at a maximum price of Rs 450 per share. The proposed Rs 81 crore buyback plan will be one of the largest offers made by an Indian company after the government allowed the facility two years ago.The company can utilise upto 25 per cent of the paid up capital and free reserves for the buy-back of shares as per SEBI regulations. The paid-up capital and free reserves as on March 31, 1999 was Rs 2,700 crore. The exact number of shares which can be bought back and the exact percentage of the paid up capital will depend on the paid-up capital and free reserves as at March 31, 2000. Bajaj Auto closed at Rs 376 on the Bombay Stock Exchange on Tuesday.For the 9-month period ended December 31, 1999, the unaudited figure of net profit (after prior years adjustment) was Rs 397.95 crore. The company has announced an interim dividend of Rs 10 per share for the year 1999-2000, which will absorb Rs 132.52 crore.The buy-back will be financed from the surplus fund of the company. The buy-back proposal will be put up for the approval of the shareholders of the company at the forthcoming annual general meeting. A share buy-back would result in higher earnings for the company through a better utilisation of its high reserves and a higher return on net worth, feel analysts. Said an analyst: ``Though I do not see any downward correction in the company's share price, the move will definitely stem any drop.''``The share buyback will boost the share valuation of the company. Bajaj Auto share was hit by the investors preference for new economy shares like IT, telecom and media. However, much will depend on how investors treat the buyback offer,'' said an investor. Indian Rayon of the Aditya Birla group had made a buyback offer last year but its investors did not go for the offer in large numbers.Hindustan Lever (HLL) has also proposed an enabling resolution to shareholders for a buy-back of its own shares at a future date - a move perceived by analysts as one to stem the drop in its share price which has been underperforming the Sensex over the last one year. Companies are permitted to buy back their own shares involving a financial outlay of up to 25 per cent of the total paid-up capital and free reserves per year, without exceeding this limit in any financial year.
