Star Cement Limited Buyback 2019

(i) Star Cement Limited is the largest cement manufacturer in northeast India.

(ii) The plant is spread across 200 hectares of land in the idyllic town of Lumshnong, a strategic location at Meghalaya that ensures easy availability of high-grade limestone. The brand “Star Cement” has established itself as the most accredited brand of the region on grounds of both quality and fair pricing.

(iii) Star Cement Limited is one of the most profitable cement manufacturers in North East India

(iv) Product: Star Cement’s product range includes Ordinary Portland Cement (OPC 43-Grade) and (OPC 53-Grade) and Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC) and Anti Rust Cement (ARC) in line with evolving customer needs.

(v) Plant: Star Cement’s 1.0 MTPA integrated cement plant at Lumshnong (Meghalaya) is proximate to key raw material reserves of limestone, coal, and shale. The company also added 0.67 MTPA cement unit in Meghalaya, 2.0 MTPA cement unit in Sonapur (Guwahati) and 2 grinding units in West Bengal with a total capacity of 0.67 MTPA ( though trading agreement), aggregating an installed capacity of 4.3 MTPA.

(vi) Pride: Star Cement was recognized by the Meghalaya state government for its pioneering cement plant in the backward area of Lumshnong in 2005. The company is an ISO 9001:2008, ISO 14001 & OHSAS 18001 certified Company.

(vii) Penetration: Brand “Star Cement’ is one of the largest in the Northeastern region. Its output is marketed through a network of over 6000 dealers and retailers across the North East, resulting in the largest market share in North East India. Star Cement also has a network of over 6000 dealers and retailers across West Bengal and Bihar. The Company’s institutional customers comprise Larsen & Toubro, National Hydro Power Corporation, Public Works Department, Indian Railways and Ministry of Defence.

Presently Star Cement is marketing super quality clinker to different grinding units located in India, Nepal & Bhutan.

Buy Back Offer Deal:

Buyback Type: Tender offer
Buyback Record Date: Jul 05 2019
Buyback Opening Date: Oct 22 2019
Buyback Closing Date: Nov 05 2019
Buyback Offer Amount: ₹ 102 Cr
Date of Board Meeting approving the proposal: Jun 21 2019
Date of Public Announcement: Jun 21 2019
Buyback Offer Size: 1.62%
Buyback Number of Shares: 68,00,000
Price Type: Tender Offer
FV: 1
Buyback Price: ₹ 150 Per Equity Share

Details of Buyback:

Star Cement Ltd 21st June, 2019, has unanimously approved a proposal to Buy- Back up to 68,00,000 fully paid-up Equity Shares of Re.1/- each of the Company (representing 1.62% of the total Equity Capital) from all the Equity shareholders of the Company on a proportionate basis through the “Tender Offer” route using the Stock Exchange Mechanism as prescribed under the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 2018 (“the Buy- Back Regulations”) as amended, at a price of Rs.150/- (Rupees one hundred fifty only) per share payable in cash for an aggregate consideration not exceeding Rs. 102 Cr.

Salient financial parameters:

( All figures are in Cr.)
2017 1286 183 80 1.91 7.0%
2018 1467 333 210 5.03 14.2%
2019 1734 361 255 6.10 14.8%
IZ View 1. The Company has shown 16.12% CAGR Revenue growth in the last 3 years. 2. The company has shown a 78% CAGR PAT Growth in the last 3 years. 3. The company is currently trading at P/E of 20. Price movement in the last 2 Months Source: Moneyconytrol

How to Participate in buyback?

1. Firstly, to be eligible for the buyback the investor should have shares of Star Cement Limited Buyback 2019 in demat or physical form as on the record date [ 05.07.2019 ] 2. Once you have shares in demat, you can participate in the buyback process which is opening from [ 22.10.2019 to 05.11.2019 ] by selling your shares through your broker on NSE or BSE. 3. Then on [ 15.11.2019 ], the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 1333 Shares at CMP of Rs. 121 [2,00,000/150=1333)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,61,293 1,61,293 1,61,293 1,61,293
No. of Shares buyback 439 666 999 1333
BuyBack Profit 12731 19314 28971 38567
Profit 7.89% 11.9% 17.96% 23.9%


Review and Recommendation of Start Cement Limited Buyback 2019 Buyback 2019 by the IZ team is: 4/10. [ Expected AR= 20-25%] Final Acceptance Ratio:
Category No. of Shares reserved for Buyback No. of Valid Applications Total Shares Tendered % Response
Retail Shareholders 1,02,000 4,202.00 11,16,000 109.41%
General Category 57,80,000 658 4,20,50,268 725.71%
Final AR =91%


    1. At the time of the announcement of the buyback , the price of share was 121.

    2. Total 1333 shares bought at 121 per share.

    3. Sold all 1333 shares two days before the record date i.e. 03.07.2019. The price on 03.07.2019 was 123. Profit per share would be 1333*2= 2666.

    4. As per the letter of offer, 30% is the minimum entitlement. So buy 30% of 1333 i.e. 399 shares at C.M.P of 94.40 on 18.10.2019.

    5. Profit would be 399*(150-94.40)= 22184.

    6. Total Profit = 22184+2666 = 24,850.

      Hi Sir, How could you sell the share 2 days before record date and still eligible for buyback? generally they say T+1 day criteria for the record date.. In this case, my assumption here stock should have been sold on or after 4th July 2019 to meet up T+1 criteria. Please correct me if I am wrong.

          Hi Sir, It’s not written anywhere. General assumption I have for buyback offer- number of stocks available in demat account at the end of record date are eligible for this offer. I use to sell the stocks a day before record date, so that it will be debited from my demat account only after record date.

          Can we sell the stock 2 days before buyback record date and still eligible for the buyback offer?

    Out of 67 shares only 19 they taking
    And one of my friends 50 out of only 14 they taking
    Means only 35 %thet taking from us…

      Looks difficult. The debt is mounting YoY. They have pledged all there shares to Private Banks.

        That means they need a lot of money to run its business. They are not generating enough revenue to run their operation. So they are pledging shares to get some cash. During pledging, if the company is unable to pay then Pledge shares can be sold in the market.

      Pledging all their shares to private banks, can reduce their losses and recover share price?

    The govt must have exempted the companies for which the buyback record date is already announced. I have Wipro 600 shares, and now will most likely lose 20%.

    *Attention Please:* As Per New Guidelines Of Today Budget The Company Has To Pay 20% Tax Of Total Size Of Buy Back Offer Means If The Total Size Of Buy Back Is 5000 Crore Then Company Has To Pay To The Government Rs.1000 Crore @ 20% Tax. It Will Be Implement/applicable Immediate Effect. Now There Are Full Chances Of Cancellation Of Buy Back Except Wipro Because As Per Law Once The Record Date Passed Then That Buy Back Offer Legally Can Not Be Withdraw/cancel. Only SEBI Can Be Cancelled With Some Solid Reasons Or Facts. It’s A Very Bad News For Market Investors. In Future Maximum Companies Will Avoid To Offer Buy Back.

      Buyback will now become at par option for promoters. Arbitrage gone? Buyback not an beneficial option for promoters

      Actually, it is a small buyback. I would suggest participating in a big size buyback especially if you are new to buyback. Else buy around 1st July and sell everything on ex-date. Then wait for a letter of offer to announce. Try to buy Star Cement around 110 levels.

    Why in some companies buyback record date announcement doesn’t require shareholders approval like Star cement
    But took month in Wipro.plz explain

      Because size of buyback is less than only 10% of Equity Capital and Reserves. In such cases only board approval is required for buyback. In case, the size of the issue is more than 10% and less than 25%(Max. permitted in a buyback) a Special Resolution is required which is passed either in EGM or through AGM or Postal Ballot and hence such issues take much longer to announce record Date.

      Look at BSE it said it will consider buyback in AGM on 15th July. They made such announcement in May itself and hence a pretty long wait for Record Date.

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