"One of the objectives of the buy-back is to use additional cash flow available with the company". Explain the Statement and elucidate the other objectives and factors which influence the buy-back decision of the company

A buy-back represent a more flexible way of returning surplus cash to its shareholders as it is governed by a process laid down by law, it is carried out through the stock exchange mechanism and is more tax efficient as it does not involve the company to make payment of dividend distribution tax and it has the benefits of long term capital gains. Buy-back leads to reduction in outstanding number of equity shares, which may lead to improvement in earnings per equity share and enhance return on net worth and create long term value for continuing shareholders. In India, while buy-back of securities is not permitted as a treasury option under which the securities may be reissued later, a company can resort to buy back to reduce the number of shares issued and return surplus cash to the shareholders. Objectives of Buy-Back 1. To strategically increase promoters' shareholding subject to compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; 2. To improve earnings per share; 3. To improve return on capital, return on net worth and to enhance the long-term shareholder value; 4. To enhance consolidation of stake in the company; 5. To prevent unwelcome takeover bids; 6. To return surplus cash to shareholders and allow profitable deployment of cash surplus; 7. To achieve optimum capital structure; 8. To support share price during periods of sluggish market conditions; 9. To service the equity more efficient; 10. To provide an additional exit route to shareholders when shares are under-valued or are thinly traded. Factors which influence the buy-back decision of the Company The decision to buy-back is also influenced by various other factors relating to the company, such as growth opportunities, capital structure, sourcing of funds, cost of capital and optimum allocation of funds generated.