Rajoo Engineers bought back shares at ₹210 per share through a tender offer that ran from 6 February 2024 to 12 February 2024 (record date 31 January 2024), with the shares listed on the BSE. Shareholders on the register on 31 January 2024, the record date, were eligible to tender. The offer covered 9,42,300 shares, 1.53% of the equity, about ₹19.79 crore.
The buyback price was 26.2 percent above the closing price of ₹166.45 on 29 September 2023, the last close before the offer; a small shareholder could tender up to 952 shares within the two-lakh-rupee limit. Incorporated in 1986, Rajoo Engineers Limited designs and manufactures blown film lines, sheet lines, and thermoformers.
The company's product portfolio includes Downward Extrusion Blown Film Lines, Mono Layer Brown Film Lines, Three Layer Blown Film Lines, Two extruder 3 layer ABA blown film line, Five Layer Blown Film Lines, Seven Layer Blown Film Lines, Physically Foamed Sheet Extrusion Line, Cross Lamination Film Line, Lab Line, Mono & Multilayer sheet extrusion system for PS/PP/EVA, Sheet extrusion technology for solar modules, and Single and twin screw extrusion system.
The company's manufacturing unit is located in Veraval (Shapar), in the district of Rajkot, Gujarat. Rajoo Engineers employs over 312 employees as of December 31, 2023. Awards and accolades: In 2003, the company was awarded an Export Excellence Certificate from the Engineering Export Promotion Council of India in recognition of the highest exports during the year as well as launched Asia's highest output 3-layer blown film line with stack die(UCD) during Plastindia.
Awarded with GUJARAT GAURAV AWARD for its outstanding contributions to the plastic industry in 2004. In 2013, Mr. C. N. Doshi, Mentor of Rajoo Engineers was awarded a Lifetime Achievement Award in recognition of his contribution to innovation in the plastics processing machinery segment and to the global plastic fraternity, the company also developed Asia's first-ever smallest 5-layeVeravalr sheet line, displayed at K-germany & awarded by IPMMI.
| Acceptance | Shares accepted | Profit |
|---|---|---|
| 33% | 314 | ₹13,674 |
| 50% | 476 | ₹20,729 |
| 75% | 714 | ₹31,094 |
| 100% | 952 | ₹41,459 |
Before brokerage and tax, on the maximum small-shareholder holding at the last close before the offer; the offer has since closed.
| Metric | 31-Mar-23 | 31-Mar-22 | 31-Mar-21 |
|---|---|---|---|
| Net Worth | 217.86 | 93.27 | 78.48 |
| Profit After Tax | 10.02 | 14.8 | 10.4 |
| Revenue | 162.58 | 174.99 | 152.83 |
| Total Assets | 173.85 | 147.72 | 146.14 |
| Total Borrowing | 1.52 | 0.28 | 3.09 |
Buyback is being undertaken, inter-alia, for the following reasons: The Buyback will help the Company to return surplus cash to its shareholders holding Equity Shares broadly in proportion to their shareholding, thereby enhancing the overall return to shareholders;
The Buyback, which is being implemented through the tender offer route as prescribed under the SEBI Buyback Regulations, would involve allocation of a number of shares as per their entitlement or 15% of the number of shares to be bought back whichever is higher, reserved for the small shareholders.
The Company believes that this reservation for small shareholders would benefit a large number of public shareholders, who would get classified as Small Shareholders as per Regulation 2(i)(n) of the SEBI Buyback Regulations; The Buyback may help in improving return on equity, by reducing the equity base, thereby leading to a long-term increase in shareholders' value;
The Buyback gives an option to the Shareholders holding Equity Shares of the Company, who can choose to participate and get cash in lieu of Equity Shares to be accepted under the Buyback offer or they may choose not to participate and enjoy a resultant increase in their percentage shareholding, post the Buyback offer, without additional investment. Optimizes the capital structure.
In a tender offer the company fixes a price, usually above the market price, and invites every shareholder who held shares on the record date to offer some or all of them back. The entitlement ratio says how many shares you may tender for every share you hold, and because most offers are oversubscribed the acceptance ratio, the share of tendered shares the company actually buys, is known only after the offer closes.
Shares are tendered through your broker during the offer window; accepted shares are paid for at the buyback price and the rest return to your demat account within a few days of the close.
Fifteen percent of every tender offer is reserved for small shareholders, defined as those whose holding in the company was worth two lakh rupees or less at the market price on the record date. Because far fewer shares are tendered in that category, its entitlement ratio is usually much higher than the general category's, and that reservation is the reason retail investors follow buybacks at all.
The figures on this page show how many Rajoo Engineers shares fit within the limit, what they cost at the last closing price, and what the profit would be at different acceptance ratios, before brokerage and tax.
Since October 2024 the amount a shareholder receives in a buyback is taxed as a dividend in their hands at their slab rate, and the cost of the accepted shares becomes a capital loss that can be set off against capital gains. That makes the after-tax result quite different from the headline premium, and for a shareholder in a high tax bracket a buyback with a modest premium can be worth less than selling on the exchange.
Work it through for your own bracket, or ask a tax adviser, before tendering.
₹210 per share, 26.2 percent above the closing price of ₹166.45 on 29 September 2023, the last close before the offer. The premium over the market price is what made tendering worthwhile.
31 January 2024. Shareholders had to hold the shares in their demat account on that date, which meant buying them by 30 January 2024 so that delivery settled in time.
The tender window ran from 6 February 2024 to 12 February 2024. Shares were tendered through brokers, and tender forms were accepted until 12 February 2024.
2/47: the company accepted 2 shares for every 47 held, about 4.3 percent of a small shareholder's holding, before any unaccepted shares from other categories were redistributed. The general category ratio was 2/47.
Up to 952 shares, which is the two-lakh-rupee small-shareholder limit divided by the buyback price of ₹210. At the closing price of ₹166.45 that holding cost about ₹1,58,460.
The offer closed on 12 February 2024. The company has not published the final acceptance ratio; the table shows what the profit would have been at 33 to 100 percent acceptance. At 33 percent the profit on a maximum small-shareholder holding would have been about ₹13,674; at 100 percent about ₹41,459, before brokerage and tax.
Accepted shares were paid for at ₹210 and unaccepted shares were returned to demat accounts by 20 February 2024.
For buybacks completed after 1 October 2024 the amount received is taxed as dividend income at your slab rate, and the cost of the accepted shares becomes a capital loss that can be set off against capital gains. Confirm the treatment for your own position with a tax adviser.