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Unit 8: Methods of Redemption–I

11. Capital Reserve 12. D.R.R. Notes
13. Forfeited 14. Capital
15. (c)

8.7 Further Readings

Books Magazines and Journals

Invest in an IPO or DPO. Chicago: Dearborn Trade, 1998.
Barker, William W. SEC Registration of Public Offerings under the Securities Act of
1933. Chicago: American Bar Association, 1997.

Brown, Meredith, ed. Mechanics of Global Equity Offerings: Structuring the Offering
and Negotiating the Underwriting Agreement. Cambridge, MA: Kluwer Law and
Taxation Publishers, 1995.

Goldblatt, Jennifer. “Market Ho-Hum about New Revenue Limit on Securities
Underwriting.”American Banker, 26 December 1996, 20.
Johnson, Hazel J. The Banker’s Guide to Investment Banking: Securities and
Underwriting Activities in Commercial Banking. New York: McGraw-Hill Professional
Book Group, 1996.
Lipman, Frederick D. Going Public: Everything You Need to Know to Successfully
Turn a Private Enterprise into a Publicly Traded Company. Upland, PA: DIANE
Publishing, 1998.
Shillinglaw, Gordon. Accounting: A Management Approach. 9th ed. New York:
McGraw-Hill Higher Education, 1992.



Case Study Buyback of Shares by MNCs in India

The Buyback Option
In October 2000, Royal Philips Electronics of Netherlands (Philips), the Dutch parent of
Philips India Limited, announced its first offer to buyback the shares of its Indian subsidiary.

The open offer was initially made for 23% of the outstanding shares held by institutional
investors, private bodies and the general public. The offer was made at ` 105, a premium
of 46% over the then prevailing stock market price. With this, Philips became one of the
first multinational companies (MNCs) in India to offer buyback option to its shareholders.
Soon after, the buyback option was offered by several multinational companies (MNCs)
to increase their stake in their Indian ventures. Some of these companies were Cadbury
India, Otis Elevators, Carrier Aircon, Reckitt Benkiser etc. Fund managers which held
these companies’ stocks felt that allowing buyback of shares was one of most favorable
developments in the Indian stock markets.
It provided a much needed exit option for shareholders in depressed market conditions.
Buyback by the company usually indicated that the management felt that its stock was
undervalued.
Contd...

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