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poverty reduction."
Table II
Share Holding Pattern in Philips India Limited
Share
Holding
30/06/2002 31/03/2002 31/12/2001
Pattern as
on (%)
Foreign
92.34 91.47 82.86
Promoters
Institutional
0.07 0.07 0.85
Investors
Private
0.14 0.18 1.49
Bodies
General
7.4 8.22 14.67
Public
Source: www.indiainfoline.com
Similarly, when Cadbury made a buyback offer, public
shareholding fell from 26.67% to just 7.32% within six months
after the majority shareholders surrendered their shares (Refer
Table III).
Investor Grievances Contd...
Moreover, in this case, investors felt that the premium offered by
Cadbury Schweppes, the UK based parent company of Cadbury,
was low. The offer was priced at Rs 500, which represented a
premium of 24% on the average high and low prices over the
past 26 weeks prior to the offer. However, Cadbury's stock had
been trading at prices in excess of Rs 500 in 1999 and 2000
(Refer Table IV), with an average P/E multiple of 60 in 1999 and
54 in March 2000. Moreover, Cadbury's third quarter (October to
December 2001) sales had increased by 11.2% compared to the
same period in 2000, while its profits had increased by 5.2%.
Hence, investors felt that the price offered for the buyback had
not taken into consideration the future potential profits of the
company and was not attractive to shareholders who had been
holding their shares for a longer term.
As a result of depressed stock market conditions, investors (in
most cases) received a low buyback price. The price at which the
open offers were made by MNCs caused great concern to both
investors and regulators (Refer Exhibit III for details of pricing
parameters of open offers).
Table III
Share Holding Pattern in Cadbury India Limited
Share
Holding
30/06/2002 31/03/2002 31/12/2001
Pattern as
on (%)
Foreign
90.25 51.00 51.00
Promoters
Institutional
0.10 0.22 20.36
Investors
Private
2.25 33.18 1.71
Bodies
General
7.32 15.46 26.67
Public
Source: www.indiainfoline.com
In many cases, minority shareholders had expressed their
opposition to the use of discriminatory pricing by MNCs for
buying back shares. For example, Otis Elevators bought back
23.9% of the equity stake from the Mahindra group at Rs.375
per share in October 1999, but made a buyback open offer for
only Rs. 280 for the remaining 31% of the shares held by the
Indian public in May 2001.