Parimal Pharma Ltd. sold its few brands to another pharmaceutical company namely Areva Ltd. for a sum of ₹6,000 crore. Number of options were available to Parimal Pharma Ltd. to deploy these funds to generate profits for

CS Professional · Capital Commodity and Money Market · PYQS · June 2018
Parimal Pharma Ltd. sold its few brands to another pharmaceutical company namely Areva Ltd. for a sum of ₹6,000 crore. Number of options were available to Parimal Pharma Ltd. to deploy these funds to generate profits for the company. A team was constituted to decide and finalize the following proposals: (I) ₹2,000 crore shall be invested in the equity of various companies as a strategic partner. (II) ₹1,500 crore shall be used to provide inter-corporate loans as to provide yield of 12%. (III) ₹1,500 crore shall be used to buy back its own equity shares having face value of ₹10 each at a price of ₹3,000 per share (present market price of ₹2,400 per share) being 10% of the paid up equity share capital of the company by way of tender route wherein promoters also intend to participate. Promoters hold 75% equity shares in the company. (IV) ₹500 crore were allocated to a team which will actively participate in capital and commodity market to generate a return of 15%. Proposal III (c) ₹1,500 crore shall be used to buy back its own equity shares having face value of ₹10 each at a price of ₹3,000 per share (present market price of ₹2,400 per share) being 10% of the paid up equity share capital of the company by way of tender route wherein promoters also intend to participate. Promoters hold 75% equity shares in the company. (ii) Mention stepwise procedure to be adopted.

Answer & Explanation:

Proposal III(c)(ii) - Stepwise Procedure for Buyback Appeal/Submission in the Board Meeting. Resolution by Shareholders to Approve the Buy-Back. An amendment to its intention of Buy-Back in the newspaper. Notice to the Stock Exchange of Board Meeting. A decision to be approved for quantum as well as for price. Fixing record date for the purpose of entitlement determination for the purpose of Buy-Back. On the receipt of clearance from SEBI, one should send letter of offer. Open an escrow account. After the receipt of sums, decide on the acceptance of board on over subscription. Make Payment in escrow accounts. Advertisement funding details of receipt of application/acceptance and also give details of charges in the shareholding pattern in different agencies.

Topics: Buyback of Shares

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