Shervani Industrial Syndicate bought back shares at ₹510 per share through a tender offer that ran from 14 March 2024 to 20 March 2024 (record date 7 March 2024), with the shares listed on the BSE. Shareholders on the register on 7 March 2024, the record date, were eligible to tender. The offer covered 1,34,000 shares, 9.94% of the equity, about ₹6.83 crore.
The buyback price was -33.6 percent above the closing price of ₹768.10 on 23 February 2024, the last close before the offer; a small shareholder could tender up to 392 shares within the two-lakh-rupee limit. Incorporated in 1948, Shervani Industrial Syndicate Limited is an India-based company that operates in the real estate and infrastructure development sectors. Shervani Industrial Syndicate Limited is a company based in India that is involved in real estate and biscuit manufacturing on a job work basis.
The company is currently focused on a group housing project called Victory Tower, located within Shervani Legacy at Prayagraj. This group housing project comprises of two towers, each 13 stories high, and a total of approximately 520 units that include two BHK, three BHK, and four-bedroom, hall, and kitchen apartments. Shervani Legacy campus covers around 50% open area consisting of a park, playground, pond for rainwater harvesting, and a road with pathways.
The company has also completed several projects like Naman Homes, Tara Towers, Amber Apartment, and Sterling Apartments. Moreover, the company owns a subsidiary known as Farco Foods Private Limited, which is involved in biscuit manufacturing on a job work basis for Surya Foods and Agro Limited under their brand, Priya Gold.
| Acceptance | Shares accepted | Profit |
|---|---|---|
| 33% | 129 | ₹0 |
| 50% | 196 | ₹0 |
| 75% | 294 | ₹0 |
| 100% | 392 | ₹0 |
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 | 88.7 | 65.61 | 69.06 |
| Profit After Tax | 23.63 | -2.77 | 6.66 |
| Reserves & Surplus | 85.97 | 62.89 | 66.34 |
| Revenue | 28.11 | 9.93 | 33.76 |
| Total Assets | 185.39 | 219.6 | 264.04 |
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 would help in improving return on equity by reduction in the share capital base and increasing shareholder value in the longer term.
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 be benefitted of a resultant increase in their percentage shareholding, post the Buyback offer, without additional Investment.
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 Shervani Industrial Syndicate 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.
₹510 per share, -33.6 percent above the closing price of ₹768.10 on 23 February 2024, the last close before the offer. The premium over the market price is what made tendering worthwhile.
7 March 2024. Shareholders had to hold the shares in their demat account on that date, which meant buying them by 6 March 2024 so that delivery settled in time.
The tender window ran from 14 March 2024 to 20 March 2024. Shares were tendered through brokers, and tender forms were accepted until 20 March 2024.
108/739: the company accepted 108 shares for every 739 held, about 14.6 percent of a small shareholder's holding, before any unaccepted shares from other categories were redistributed. The general category ratio was 2/45.
Up to 392 shares, which is the two-lakh-rupee small-shareholder limit divided by the buyback price of ₹510. At the closing price of ₹768.10 that holding cost about ₹3,01,095.
The offer closed on 20 March 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 ; at 100 percent about , before brokerage and tax.
Accepted shares were paid for at ₹510 and unaccepted shares were returned to demat accounts by 27 March 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.