The board of One97 Communications(Paytm) will meet today to consider a share buyback proposal. In a filing to BSE on December 8, Paytm said its management felt that given the company’s prevailing liquidity position, a buyback may be beneficial for its shareholders.
“The outcome of the board meeting will be disseminated to the stock exchanges after conclusion of the Board meeting on December 13, 2022, in accordance with the applicable provisions of the SEBI Listing Regulations,” Paytm had said on December 8.
While questions have been raised over whether loss-making Paytm should go in for a share buyback, the company said it strongly disagrees with comments and speculations from renowned advisory firms regarding the company’s financial performance and proposed share buyback plan.
The company reiterated that with respect to the buyback proposal, it will fully comply with the statutory framework and regulations that govern the formulation of a share buyback plan.
The decision whether or not to approve it will be made by Paytm’s board after a due diligence, it said.
Paytm’s plan for a buyback, the company said, is driven by its strong financial performance and liquidity. It reiterates that IPO funds cannot be used for a buyback and the company will be using its ample liquidity from pre IPO, if the buyback is approved by the board.
With respect for the necessary processes involved in the buyback, “Paytm encourages all stakeholders to wait for the outcome of the board's decision and details, which will be shared with the exchanges first,” it said.
A Paytm spokesperson said, "We strongly disagree with the approach of speculating on the drivers and outline of a buyback without waiting for the outcome of a board decision. While tabling a proposal for a buyback, the company has ensured that there is surplus liquidity, which means that all cash requirements are adequately budgeted. The management is confident of strong operational performance and remains focused on building long-term value for its shareholders,” he said.
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