Financial Daily from THE HINDU group of publications
Tuesday, Mar 26, 2002
Corporate - Buyback
HLL open to buyback; but not now: Banga
JAMSHEDPUR, March 25
HINDUSTAN Lever Ltd (HLL) is open to a buyback of shares, though not in the immediate future.
This was indicated by the company's Chairman, Mr M.S. Banga, to Business Line when asked whether HLL was considering a buyback of shares as other multinational companies have done.
"Yes, taking a long-term perspective, we are certainly considering a buyback of shares," Mr Banga said.
However, he explained that there were no immediate plans on the matter. "We will buy back shares, but nothing as of now," he said. Mr Banga was speaking to this correspondent after receiving the Sir Jehangir Ghandy Medal for Industrial and Social Peace at the 46th annual convocation of XLRI here. Incidentally, HLL had hitherto said that buybacks were not on its agenda.
During the past three years, a number of leading multinational companies have chosen to move out of the Indian stock markets. Corporate analysts say that these companies prefer more flexibility in operations by avoiding stock market disclosure norms.
In 1999, six foreign promoters made open offers to their Indian shareholders. The number rose to eight in 2000 and then to 14 in 2001.
In monetary terms, Rs 153.38 crore was spent on buybacks in 1999. This went up to Rs 362.99 crore in 2000 and to Rs 1,133.82 crore in 2001. During the first three months of 2002, more than Rs 1,300 crore has been earmarked for buybacks.
The significant buybacks in 2002 were those of Reckitt Benckiser in March, for Rs 400 crore, and Cadbury India Ltd in January, for almost Rs 875 crore.
When asked about how HLL was gearing up to meet the bearish sentiments in the beverages market, specifically about the competition being provided by Tata Tea, Mr Banga said: "The Indian beverages market is big enough to accommodate the growth of both these companies."
(Tata Tea recently introduced a number of brands and also spruced up its activities vis-à-vis Barista Coffee, owned by its subsidiary, Tata Coffee.)
Recently, HLL successfully relaunched its old soap brand, Lifebuoy.
When asked whether the company had drawn up similar plans for other brands, Mr Banga preferred not to disclose any further detail.
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