Larsen and Turbo (L&T) Limited on Saturday said in a stock exchange filing that the market regulator SEBI (Securities and Exchange Board of India) has asked it not to proceed with its share buyback plan worth Rs 9,000 crore. The permission was denied on the ground that the equity buyback plan was not in compliance with the Companies Act and norms set by SEBI itself.
"Since the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back (assuming full acceptance) would be more than twice the paid-up capital and free reserves of the company based on consolidated financial statements", L&T was disallowed to go ahead with it, the company said.
Equity share buybacks refer to the repurchase of the issued shares by a company by paying the market value per share to shareholders so that it can take back a part of the ownership of the company that was previously public. Buybacks reduce the number of shares of the listed company available in the open market for circulation.
L&T proposal involved a buyback offer of up to 6.1 crore shares at a price of Rs 1,475 per piece aggregating Rs 9,000 crore if fully accepted. It was to be offered to those holding the shares as on 15 October.