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KIOCL Buyback
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The Board of Directors of KIOCL (INDIA) LTD. approved a share buyback for its investors on Sep 18, 2018. The details of the buyback include:

Record Date: October 1st, 2018

Buyback price: Rs. 170

Premium/Discount as per closing price on 18 Sep’18:  - 25.76% on Rs. 229

Buyback of shares: 1,25,88,235 equity shares (representing 1.98% of the total number of equity shares in the paid-up share capital)

Amount of Buyback: Rs. 214 crores (being 9.99% of the aggregate of fully paid-up equity share capital and free reserves)

Shareholding Pattern: Promoters have 99% holding i.e. 62,81,44,130 equity shares. The Public Shareholding in the Company is 1.0039% at present with Non institutional Public shareholding being 0.32%.

*The Public Shareholding in the Company is 1.0039% at present . As per the listing agreements with the stock exchanges , the Company is required to have a minimum of 25% as public shareholding. The company has taken up the matter with the Central Government (Ministry of Steel) and concerned Authorities for dilution of Government holding to achieve the same.

Shareholding with up to 5000 shares: 15,71,438 shares representing 0.24% of total 63,45,13,800 shares.

The maximum no. of shares held to qualify as small shareholder are 1176 shares. Reserved shares for retail investors is 18,88,235. Hence the acceptance ratio comes out to be 83.22%.

Following are the dividends as provided by the company in the past 2 years:

Corporate Action

Price

Ex-Date

Final Dividend

0.79

23 Aug 2018

Interim Dividend

0.27

26 Mar 2018

Dividend

0.26

23 Aug 2017

 

Company’s share price fell 20% the next day after the buyback announcement due to low buyback price and opened close to the buyback price at Rs.183.2 on 19 Sep’18 as compared to the 18 Sep’18 closing of Rs. 229.

The dividend payout ratio has not been advantageous for the investors in the last 2 years as the companies retained much of the profits and plans to used it as part of capital expenditure in the pellet plant in Vishakhapatnam. Considering the threat from international markets with relation to trade tariffs and the upcoming capex cycle, this buyback has many risks for the investors.

Therefore we recommend investors to avoid the buyback.

*Source: Company Annual Report 2018

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