Post-buyback, the Birlas' stake in Indian Rayon will go up to 28.7 per cent from the present 21.5 per cent. DSP Merill Lynch has been appointed as the merchant banker to the offer.

The offer will remain open between September 29 and October 14 and the company will make a detailed public announcement soon setting out the complete modalities.

Following the demerger of its cement business into Grasim, the company has been left with surplus funds of around Rs 200 crore, part of which has been utilised to retire high-cost debt, and the balance deployed in liquid and marketable financial instruments.

Post restructuring of the cement business, Indian Rayon has a debt to equity ratio of 0.20. The company is among the leading players in all its mainline businesses.

"The buy-back isunlikely to cause any material impact on the profitability of Indian Rayon, except to the extent of loss of interest income on the amount to be utilised for buy-back," the company said. The buy-back will also enhance the EPS of the company and create long-term shareholder value, it said.

As announced earlier, Indian Rayon will buy back upto 25 per cent of its outstanding equity from shareholders. If the buyback offer is fully subscribed to, it will result in an outflow of Rs 127-144 crore approximately, depending on the final price.

The move will also provide an opportunity for those shareholders who wish to exit from the stock without adversely affecting the interests of the other shareholders.