The company says a share buyback will provide it with an opportunity to utilise available funds advantageously, reduce the cost of servicing the share capital, contribute to the improvement in the intrinsic worth of the shares and consequently benefit public shareholders.

Crompton Greaves' articles of association are, therefore, proposed to be amended to permit the company to buy back its own shares, subject to the necessary statutory approvals and permissions.Crompton Greaves is moving this enabling speci

al resolution at its forthcoming annual general meeting in anticipation of an amendment in the Companies Act, 1956. The amendment is expected to incorporate a provision enabling companies to buy back their own shares for the reduction of capital or for reissue,subject to the conditions as may be prescribed under the proposed amendment.

Meanwhile, the company's auditors have qualified its accounts on two counts, which include the absence of a provision in respect of income-tax demands of Rs 1.17 crore and excise demands of Rs 17.73 crore (net after income-tax saving is Rs 11.53 crore). Had these provisions been made, the reserves and surplus would have been lower by Rs 12.70 crore, while current liabilities and provisions would have been higher by Rs 12.70 crore.

The company says that non-provision is in the case of income-tax demands of Rs 5.37 crore, against which the company has preferred appeals. "Similar matters involved in the appeals have been decided in favour of the company in the past. The liability is partly set off against the tax credit of Rs 4.20 crore due to the company under section 115 JAA of the Income Tax Act, 1961," the company says.

The excise-duty demands, which have been disputed by the company (net of income tax), as on March 31, 1998,stood at Rs 11.53 crore.

The auditors, Sharp & Tannan, have also expressed their inability to offer an opinion on possible losses in respect of investments aggregating to Rs 2.85 crore and advances aggregating to Rs 18.74 crore made to Punjab Power Generation Machines Ltd (PPGML) and CG Faxemail Ltd. "We are unable to express any opinion as regards the possible loss, since these companies continue to carry on their business and their accounts have been prepared on a going concern basis," the auditors say.

Crompton Greaves holds 11,95,475 equity shares of Rs 10 each fully paid in Punjab Power, from whom Rs 14.12 crore is due on account of advances given. Punjab Power registered a loss of Rs 17.22 crore for the year ended March 31, 1998, and has become a sick company.

In the case of CG Faxemail, Crompton Greaves holds 5,00,001 equity shares of Rs 10 each fully paid. A sum of Rs 4.62 crore is due from Faxemail on account of advances given, even as it has made a loss of Rs 3.55 crore against paid-up capitaland reserves of Rs 50 lakh.