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Poor response from shareholders -- Heritage Foods to close buyback on March 28

Ch. Prashanth Reddy

HYDERABAD, March 25

THE Heritage Foods (India) Ltd offer to buy back shares from the open market has evinced poor response from shareholders.

The company could purchase only about one lakh shares from the public till date as against the targeted purchase of 14 lakh shares from an estimated 9,284 small shareholders.

The buyback offer which opened on January 24 was to provide an exit route for small shareholders who held not more than 500 shares. Heritage's board had approved a maximum limit of Rs 3 crore for the buyback at a price not exceeding Rs 30 per share.

The offer was sought to be kept open till January 3, 2003 or when the company completed the buyback to the extent of 14 lakh shares or the date as may decided by its board. However, keeping in view the poor response from the shareholders, the company is now closing the scheme on March 28 even though it is far short of the targeted figure of acquisition.

Heritage's Whole-Time Director, Dr V. Nagaraja Naidu, told Business Line that the poor response was due to the fact the most of the shareholders were not clear about the mode of operation of the buyback scheme.

Besides, the shareholders seemed to be under the "misconception'' that the company would buy the shares at Rs 30 after reading the sentence "price not exceeding Rs 30 per share", in the offer document. In fact, the company had purchased one lakh shares at an average price of Rs 25.50.

When the scheme opened, the market price of the shares stood at Rs 19 each. Last week, they traded at Rs 26 at the BSE.

Heritage's buyback price ranged between Rs 23 and Rs 26. In December last, prior to the open offer, Heritage had purchased 16,000 shares at the Madras Stock Exchange at Rs 18.46.

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