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Case Code: FINC161
Case Length: 12 Pages 
Period: 2016-2017   
Pub Date: 2019
Teaching Note: Available
Price:Rs.300
Organization : Vardhman Textiles Limited
Industry :Textiles & Apparel
Countries : India
Themes: Share Buyback/ Capital Structure
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
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Leadership & Entrepreneurship

Vardhman Textiles Ltd.`s Buyback of Shares

 

ABSTRACT

 
The case study, Vardhman Textiles Ltd.’s Buyback of Shares discusses the share buyback offer issued by VTL, one of the leading textile companies in India. The management of VTL believed that the company was doing well on the basis of various financial parameters, but its share price did not reflect the correct value of the company. Also, VTL had sold its stake in one of its joint ventures and got cash of Rs. 4.13 billion. The growing cash balance and reserves and low debt to equity ratio motivated the management of VTL to go in for a share buyback in place of a regular dividend. The case provides information to understand the complete process of share buyback and to analyze whether the decision taken by VTL’s management was the right one or not.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • To discuss various methods of distribution of excess cash to the shareholder.
  • To discuss the process of share buyback.
  • To identify various reasons to accept or reject any buyback offer.
  • To explore the various motives behind a share buyback.
  • To understand the various methods of share buyback.
Contents
INTRODUCTION
BACKGROUND NOTE
GROWTH IN CASH AND BANK BALANCE
DISTRIBUTION OF WEALTH TO SHAREHOLDERS
SHARE BUYBACK BY VTL
EXHIBITS

Keywords

Share Buyback; Dividend; Textile industry; Cash and bank balance; Wealth Distribution; Capital Structure; Dividend Distribution Tax; Buyback through Tender Offer; Buyback from Open Market

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