Promoters spend big on buyback of own shares

One and a half dozen companies, including bluechips like Reliance Infrastructure and DLF, have bought back shares worth more than Rs 1,100 crore between March and December 2008. With share prices having fallen sharply during the year, promoters of many companies were able to raise their stakes cheaply. Under a buyback programme, a company purchases its own shares in the open market. While the shares are usually cancelled, it can also keep them as treasury shares so that the company would be able to resell them in future. “There are many reasons why a company goes for a buyback. In a bad market, it offers the much-needed support to share prices.