ManagementBosch group manages only a third of year-long buyback target
Bosch Ltd, a supplier of automotive, industrial consumer and building technology products, has failed to meet its target for the year-long share buyback programme. Robert Bosch GmbH of Germany, the parent company of Bosch, currently holds 71.18 per cent stake in Bosch Limited.
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Bosch Group, which had planned to increase its stake in Bosch Ltd through an open market purchase of shares over the last 10 months, has managed to buy back close to 2 per cent as against the target not exceeding five per cent of the paid-up share capital of the company (up to 74.73 per cent).
The company’s share buyback programme, which had commenced on December 15, 2008, will end on October 23, 2009.
Out of 2.14 million equity shares proposed to be bought back, as on October 15, 2009, the company had managed to buy back 6,52,560 equity shares, which is close to one third of the proposed buy back, at an average price of Rs 3,070 per equity share.
The company had put an outward ceiling of Rs 4,500 per equity share with a face value of Rs 10 each and had earmarked Rs 650 crore for the proposed buyback plan. However, as on date, the company has spent about Rs 200 crore, which is about 31 per cent of the total amount allocated for the purpose, company sources said.
At the time of launching the buy back plan, Bosch had owned 69.73 per cent stake in the company. However, as on date, the company has increased the stake to 71.18 per cent. Financial institutions, foreign institutional investors, mutual funds among others cumulatively hold around 20 per cent of the stake and rest is with the public.
“The company’s board will meet soon and take a decision on the next action plan. At this moment, there is no possibility of further extending the buy back programme,” company sources said.
Bosch’s previous buy-back offer was made during June-July period in 2007. But Bosch, which at that time was still called Mico, could only mop up 10 per cent of the 20 per cent stake on offer despite revising the price upwards to Rs 4,600 from Rs 4,000, after the first offer was announced.
The Bosch group operates in India through four companies — Bosch Ltd, Bosch Chassis Systems India Ltd, Bosch Rexroth India Ltd and Robert Bosch Engineering and Business Solutions Ltd. The group also has in the country the largest development centre, outside Germany, for engineering and technology solutions.
In August 2008, Bosch Electrical Drives India Pvt Ltd, a 51:49 per cent joint venture between Robert Bosch Investment Nederland B.V. and Igarashi Motors India Ltd for production of motors for wiper system and window lift system and motors for engine cooling systems for automotive applications, was commissioned at Chennai.
For the second quarter ended June 30, 2009, Bosch Ltd reported a net profit of Rs 188.2 crore, a drop of 14.3 per cent over the corresponding quarter last year. Its turnover was up at Rs 1,247.8 crore, a growth of 2.1 per cent over the same period a year ago.