Coal India today said its subsidiary CCL will buy back shares worth Rs 1,128 crore, a move which can help the parent add to the government’s divestment programme.
The Board of Directors of Central Coalfields Ltd (CCL) has considered and approved the buyback of 23,50,000 fully paid equity shares of face value of Rs 1,000 from the members of the company on a proportionate basis through tender offer, Coal India said in a BSE filing.
The CCL buyback will represent 25 per cent of the total number of equity shares in the paid-up share capital of the subsidiary for an aggregate amount not exceeding Rs 1,128 crore, maximum buyback size being up to 25 per cent of the paid-up equity share capital and free reserves as on financial year ended March 31, 2016.
The buyback will be at a price of Rs 4,800 per equity share payable in cash.
Coal India had said that its two subsidiaries Mahanadi Coalfields and Northern Coalfields will buy back total shares worth around Rs 1,978 crore from their shareholders.
Later, the coal PSU said that its arm Western Coalfields will buyback total shares worth Rs 789.30 crore from its shareholders.
Earlier, CIL announced that its another arm South Eastern Coalfields will buyback shares worth Rs 1,200.19 crore.
The government has approved buyback of shares by PSUs as it feels leveraging surplus cash would be the best option for them rather than going for disinvestment. The rich PSUs are estimated to be sitting on cash pile of Rs 2.6 lakh crore.
Buyback helps a company to reduce equity by using idle cash and hence provide better returns to shareholders.