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Balrampur Chini mulls buyback

Kohinoor Mandal

KOLKATA, Nov. 29

SUGAR major, Balrampur Chini Mills Ltd, is considering a buyback of its shares. It has also decided to empower its shareholders with the right to cast postal ballots, including the electronic media.

The company has convened an extraordinary general meeting of the shareholders on December 24, to pass the two resolutions.

Company sources said that the Articles of Association have to be amended before considering a buyback. It may be noted that about two-and-half years back, Balrampur Chini got the shareholders nod for a buyback. However, till date it has not announced the date or the amount of shares it would buyback.

A top executive of Balrampur Chini confirmed the recent developments, but added that the proposed resolutions are only enabling resolutions.

The Companies Act has been amended through the Companies (Amendment) Act, 1999 and it permits a company to buy back its shares. So, we have decided to amend the Articles of Association to facilitate the company to buy back its own securities at any futur e date, he told Business Line.

The amended Companies Act allows 10 per cent buyback through a resolution passed by the board of directors. For a 25 per cent buyback, the shareholders approval is necessary. However, for either of the two, the Articles of Association must be amended.

The second resolution regarding postal ballot is a routine exercise. All corporate houses are likely to get such a resolution passed to keep in line with the guidelines of the amended Companies Act, he said.

Regarding buyback of shares, the executive added that the company had drawn up new projects such as a power plant and a greenfield sugar estate. Funds are necessary for these projects and I would not think the company would go in for an immediate buyback . I repeat these are only enabling resolutions, he added.

However, the reserves and surplus of Balrampur Chini are healthy. For the year ended March 31, it registered a turnover and net profit of Rs 599.60 crore and Rs 47.82 crore, respectively. Its reserves and surplus stood at Rs 231.28 crore on a paid up cap ital of Rs 23.97 crore.