Easy way to stay afloat

While many companies are trying to find ways to protect bottomlines in a depressed market, share buybacks and consequent delisting has helped several MNCs and some domestic firms notching up better profits. "Several big names like Atlas Copco, Bayer CropScience, Cadbury, Kodak India, Madura Coats, Nestle India, Philips India, and Wartsila India have seen their bottomlines improve substantially following a buyback," an analyst said.While low market valuations have made their buyback programmes a cheaper proposition, delisting will allow the boards of these companies greater flexibility to spruce up managements and take tough decisions to ride the downturn, the analyst added. In Atlas Copco, the promoter holding went up to 83.77 per cent from 50.99 per cent. The company's profit in Q4 of 2002 (September-December) was Rs 7.42 crore, up from Rs 2.61 crore in the corresponding quarter of 2001. In the case of Bayer CropScience, the promoter shareholding went up to 82.30 per cent from 50.09 per cent following a buyback. The company reported a profit of Rs 1.56 crore in the fourth quarter, as against a loss of Rs 6.48 crore in the corresponding period of the previous year. "Following the global takeover of Aventis CropScience by Bayer, Bayer CropScience was mandated by SEBI to make the mandatory open offer. But due to drought, its shares were down, so the true value of the company was never really reflected." Philips India increased holdings from 82.86 per cent to 93.56 per cent. For 2002-03, it reported a profit of Rs 84.29 crore, after losses of Rs 21.15 crore and Rs 34.15 crore in the previous two years. In the case of Nestle and Wartsila, the promoter holding increased to 58.71 per cent and 89.69 per cent from 51.23 per cent and 51 per cent, respectively. Their profits in the fourth quarter of 2002-03 increased to Rs 74.70 crore and Rs 10.30 crore respectively.