Symphony bought back shares at ₹2,500 per share through a tender offer that ran from 27 August 2024 to 2 September 2024 (record date 21 August 2024), with the shares listed on the BSE, NSE. Shareholders on the register on 21 August 2024, the record date, were eligible to tender. The offer covered 2,85,600 shares, 9.33% of the equity, about ₹71.40 crore.
The buyback price was 70.9 percent above the closing price of ₹1,463.20 on 6 August 2024, the last close before the offer; a small shareholder could tender up to 80 shares within the two-lakh-rupee limit. Symphony Limited is an Indian multinational company and the world's largest manufacturer of air coolers. The company's product portfolio includes Household Coolers, Commercial Coolers, Large Space Venti-Coolers, and Tower Fans. The company has offices in more than 60 countries.
Symphony Limited was founded in 1988 in Gujarat, India. It introduced a new type of evaporative air cooling in India and expanded its innovation globally.
| Acceptance | Shares accepted | Profit |
|---|---|---|
| 33% | 26 | ₹26,956 |
| 50% | 40 | ₹41,472 |
| 75% | 60 | ₹62,208 |
| 100% | 80 | ₹82,944 |
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-24 | 31-Mar-23 | 31-Mar-22 |
|---|---|---|---|
| Profit After Tax | 148.13 | 115.88 | 120.86 |
| Revenue | 1,206.8 | 1,237.79 | 1,079.01 |
| Total Assets | 1,217.65 | 1,403.38 | 1,367.15 |
The buyback will help the company to return the surplus cash to its shareholders holding equity shares. The buyback is expected to improve return on equity through the distribution of cash and improve earnings per share by reducing the equity base; thereby increasing the long-term shareholder's value.
The buyback gives an option to the shareholders holding equity shares of the company, either to sell their equity shares and receive cash or not to sell their equity shares and get a resultant increase in their percentage shareholding, post the buyback offer, without additional investment.
The buyback, which is being implemented through the tender offer as prescribed under the buyback regulations, would involve a minimum reservation of 15% for small shareholders and allocation of a higher number of shares as per their entitlement or 15% of the number of shares to be bought back, reserved for the small shareholders. The company believes that this reservation for small shareholders would benefit many public shareholders, who would be classified as small shareholders.
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 Symphony 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.
₹2,500 per share, 70.9 percent above the closing price of ₹1,463.20 on 6 August 2024, the last close before the offer. The premium over the market price is what made tendering worthwhile.
21 August 2024. Shareholders had to hold the shares in their demat account on that date, which meant buying them by 20 August 2024 so that delivery settled in time.
The tender window ran from 27 August 2024 to 2 September 2024. Shares were tendered through brokers, and tender forms were accepted until 2 September 2024.
10/421: the company accepted 10 shares for every 421 held, about 2.4 percent of a small shareholder's holding, before any unaccepted shares from other categories were redistributed. The general category ratio was 3/830.
Up to 80 shares, which is the two-lakh-rupee small-shareholder limit divided by the buyback price of ₹2,500. At the closing price of ₹1,463.20 that holding cost about ₹1,17,056.
The offer closed on 2 September 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 ₹26,956; at 100 percent about ₹82,944, before brokerage and tax.
Accepted shares were paid for at ₹2,500 and unaccepted shares were returned to demat accounts by 9 September 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.