RIGHTS ISSUE AND RIGHTS ISSUE AND BUYBACKBUYBACK

RIGHTS ISSUERIGHTS ISSUE

• Also known as Privileged subscription.Also known as Privileged subscription.

• Issuing rights to a company's existing shareholders to buy a Issuing rights to a company's existing shareholders to buy a proportional number of additional securities at a given price proportional number of additional securities at a given price (usually at a discount) within a fixed period. (usually at a discount) within a fixed period.

RIGHTS ISSUERIGHTS ISSUE

• Why?Why?

• Increased liquidityIncreased liquidity

• Better leveraging opportunitiesBetter leveraging opportunities

• Maintains proportionate ownershipMaintains proportionate ownership

TATA STEELTATA STEEL

• Ratio 1:5Ratio 1:5

• Announcement: 17Announcement: 17thth April, 2007 April, 2007

• Record date: 5Record date: 5thth November, 2007. November, 2007.

• Issue will open on November 22 and close on December 21, Issue will open on November 22 and close on December 21, 20072007

• Issue is priced at Rs. 300 per share. 43.1% lower than the Issue is priced at Rs. 300 per share. 43.1% lower than the stock's closing price of Rs.528. stock's closing price of Rs.528.

• Rights offer of equity shares to raise Rs.3,654 crore.Rights offer of equity shares to raise Rs.3,654 crore.

TATA STEELTATA STEEL• Effect of Rights issue on Market price:Effect of Rights issue on Market price:

• 17/04/200717/04/2007 Rs. 468Rs. 468

• 5/11/20075/11/2007 Rs. 879Rs. 879

• 13/11/200713/11/2007 Rs. 825Rs. 825

• CalculationsCalculations

• 5 Shares bought on Record date at CMP: Rs.43955 Shares bought on Record date at CMP: Rs.4395

• 1 Share received in rights issue: Rs.3001 Share received in rights issue: Rs.300

• Average value per share: Rs.782.5Average value per share: Rs.782.5

State Bank of IndiaState Bank of India

• Ratio 1:5Ratio 1:5

• Announcement: 14Announcement: 14thth January, 2008 January, 2008

• Record date: 4Record date: 4thth February, 2008 February, 2008

• Issue is priced at Rs.1590 per share at 35% discount on Issue is priced at Rs.1590 per share at 35% discount on market price of Rs. 2462. market price of Rs. 2462.

• Issue size: Rs 16,736.31 crore.Issue size: Rs 16,736.31 crore.

• ReasonsReasons

State Bank of IndiaState Bank of India

• Effect of Rights issue on Market price:Effect of Rights issue on Market price:

• 14/01/200814/01/2008 Rs. 2323Rs. 2323

• 4/02/20084/02/2008 Rs. 2185Rs. 2185

• 27/02/200827/02/2008 Rs. 2082Rs. 2082

• CalculationsCalculations

• Average cost of 6 (5+1)shares purchased on 14Average cost of 6 (5+1)shares purchased on 14thth : Rs.2200 : Rs.2200

• Average cost of 6 (5+1)shares purchased on 4Average cost of 6 (5+1)shares purchased on 4thth : Rs.2089 : Rs.2089

BUY-BACKBUY-BACK• Buyback is reverse of issue of shares by a company where it Buyback is reverse of issue of shares by a company where it

offers to take back its shares owned by the investors at a offers to take back its shares owned by the investors at a specified price.specified price.

• Why Buy-Back?Why Buy-Back?

• Unused cashUnused cash

• Tax gainsTax gains

• Market perceptionMarket perception

• Exit optionExit option

• Show better financial ratiosShow better financial ratios

• Increase promoters’ stakeIncrease promoters’ stake

HULHUL• Board of Directors - July 29.Board of Directors - July 29.

• Shareholders - September 14.Shareholders - September 14.

• Buyback commenced – 3Buyback commenced – 3rdrd October & ended on 31 October & ended on 31stst January. January.

• Rs 630 Crore to Buy Back.Rs 630 Crore to Buy Back.

• Open market purchases through the BSE and the NSE.Open market purchases through the BSE and the NSE.

•   Total no. of shares bought back is 3,02,35,772 equity shares Total no. of shares bought back is 3,02,35,772 equity shares of Re.1 each.of Re.1 each.

• Average price of Rs.207.13.Average price of Rs.207.13.

HULHUL• Before Buy-BackBefore Buy-Back

• EPS- Rs.8.05EPS- Rs.8.05• P/E ratio- 23.6 timesP/E ratio- 23.6 times• CMP- Rs.190CMP- Rs.190

• After Buy-Back (current)After Buy-Back (current)• EPS- Rs.8.75EPS- Rs.8.75• P/E ratio- 25.25 timesP/E ratio- 25.25 times• CMP- Rs.220CMP- Rs.220

RILRIL• The Buy-Back scheme started from January 10, 2005 to The Buy-Back scheme started from January 10, 2005 to

December 26, 2005. December 26, 2005.

• The buyback was approved at Rs 570 per share.The buyback was approved at Rs 570 per share.

• Total Buy-Back limit Rs.29.99 billionTotal Buy-Back limit Rs.29.99 billion

• Provision for the buyback scheme from its reserves of Rs.300 Provision for the buyback scheme from its reserves of Rs.300 billion.billion.

• Open market purchases through stock exchange.Open market purchases through stock exchange.

RILRIL• Before Buy-BackBefore Buy-Back

• EPS- Rs.37EPS- Rs.37

• P/E ratio- 14.05 timesP/E ratio- 14.05 times

• CMP- Rs.520CMP- Rs.520

• One month after commencementOne month after commencement

• EPS- Rs.39EPS- Rs.39

• P/E ratio- 14.75 timesP/E ratio- 14.75 times

• CMP- Rs.575CMP- Rs.575

THANK YOUTHANK YOU