The Philips scrip has been on an upward trend even a few days before the formal announcement of the buyback on October 9 (Thursday) on the basis of market speculations. The share price had increased by 5 per cent on October 4 (Saturday) to close at Rs 60.95.

The Philips buyback offer at Rs 105 per share is at a premium of 46 per cent over the closing price of Rs 71.85 on the Bombay Stock Exchange (BSE) on October 9. Thereafter, the scrip has been on an uptrend with the final closing price before the buyback being at Rs 95.35 on November 10 (Friday).p This represents a whopping increase of nearly 33 per cent after the buyback decision was formally announced. However, the buyback price will now be at a premium of about 10 per cent to the current market price.

The parent company is making an open offer to acquire 1,04,72,671 fully paid-up equity shares of Rs 10 each (representing 23 per cent of the outstanding equity share capital) at Rs 105 per fully paid-up equity share payable in cash.

Analysts feel that the offer for the additional stake in Philips India will cost the parent company around Rs 110 crore.

According to Philips, the justification to hike the stake in Philips India was to enable the parent company to have better commitment in terms of resources, technology and new products.

Analysts pointed out that Philips has been beset with problems for the last few years with its share in the consumer durables market declining.

Philips has been focussing on restructuring to achieve results. But analysts point out that the problem lies in not being able to respond to the market situations. The 14-inch and 20-inch sets account for 55 per cent of the total colour television (CTV) market. But despite being one of the first companies to enter the CTV market,it has only recently entered these segments.

Philips registered a loss of Rs 4.05 crore for the third quarter ending October 1, 2000 against a net profit of Rs 4.12 crore for the same period last year.