AV Birla group company Indian Rayon is buying back up to one-fourth
of its equity share capital at a price ranging between Rs 70 and Rs 90 per share. At Rs
90, it will cost the company Rs 152 crore. The company has a cash surplus of Rs 200 crore.
AV Birla Group chairman Kumar Mangalam Birla announced
that the company will also exit the loss-making sea water magnesia business. The group
will probably sell it and, if it cannot do so by September-end 1999, it will close down
the plant and dispose of the assets.
There is a simple reason for the buyback. Mr Birla said
Indian Rayon is working at below capacity and there are no major capital expenditure
plans. The best way to add value to shareholders is to return the funds to them.
The company is expected to seek approval of the shareholders at its 17
September annual general meeting for the sale of the and the buyback scheme.