KPR Mills withdraws buyback plan; stock tanks

The first company to react to the 20 per cent buyback tax introduced in the Union Budget is KPR Mills. KPR Mill on Thursday informed the bourses that it would withdraw its buyback scheme owing an increase in the amount of Buyback obligation due to the tax proposed in the Finance Bill 2019. The company cited that the buyback tax was neither contemplated nor prevailing at the time of the consideration and approval of the buyback scheme by its board and shareholders.

The company further informed that it is not permitted to meet the buyback obligations beyond the amount approved by the board of directors and shareholders of the company. Also, the buyback can only be implemented through the borrowed funds which is prohibited by law.

On June 10, the company informed about a buyback and on June 17, it submitted the Letter of Offer regarding the buyback of 37,50,784 shares at a price of Rs. 702 per equity share.

In response to this development, the stock of KPR Mills opened gap down at Rs. 571.25 as against its previous close of Rs. 608 apiece. However, later the stock recovered and at 12.13 hours, it was trading at Rs. 588.50, down by 3.21 per cent.