Universal Leather & Footwear have told the stock exchange that following an extraordinary general meeting of the shareholders held on June 20, a buy-back of 631,055 shares at Rs80 per share (Rs1 = $0.021) has been approved. It is an interesting development for the country’s corporate sector. The decision to repurchase its own shares is only the second such offer by a listed company in Pakistan.

Universal Leather have a sound record of profitability and dividends. Built up over many years of sound operations, the company’s reserves have ballooned to several times their paid-up capital of Rs40.0 million, which produced the break-up value of Rs87.77 for the 10-rupee/share at the close of the 2001 financial year. The board had disbursed the last bonus to the shareholders at 3.78pc in 1996.

At the general meeting, the company told the shareholders that the decision to buy-back 631,055 shares (15pc of the outstanding shares) had been taken by the company ‘to facilitate those shareholders who intend to dispose of their shares but cannot do so as shares of the company are seldom traded’. The highest price quoted on the stock exchange in 2000 stood at Rs58.

The buy-back price of Rs80 appears to be reasonably high, but the company has given the shareholders just 15 days to submit the offer for buy-back on prescribed form.

Universal Leather reported sales of Rs1.5bn for the financial year ended June 2001. For the latest nine months to March 31, 2002, the company have posted an after-tax profit of Rs51 million on sales valued at Rs735 million. This is lower than the profit of Rs57 million on turnover of Rs1.04 billion for the comparable nine months of last year, and the decline has been attributed to the September 11 events. Exports sales suffered, and this historically has been the company’s major forte.