1. Govt-owned companies spend `11,224.96cr to buy back shares

Govt-owned companies spend `11,224.96cr to buy back shares

With the completion of buyback of shares by MOIL and NMDC, the total amount spent by government owned companies to buy back their own shares has reached `11,224.96 crore.

By: | Mumbai | Published: October 18, 2016 6:22 AM

With the completion of buyback of shares by MOIL and NMDC, the total amount spent by government owned companies to buy back their own shares has reached `11,224.96 crore. After the buybacks by Coal India and Bharat Electronics, which are currently underway,this figure is likely to touch `17,045 crore.

Last week both MOIL and NMDC announced in their re- spective regulatory filings that they have completed their buy- backoffersworth`863croreand `7,527 crore. Of the total buy- back offers worth `26,930 crore thisyear63%or`17,047wascon- tributed by government-ownedcompanies .Share buy backs havebecomeaneffectivetoolfor the government to meet its dis- investment target.

According to Department of Investment and Public Asset Management (DIPAM), these guidelines any CPSE with a net worth of `2000 crore and a cash and bank balance of `1,000 crore can exercise the option of a buy- back. The government had set a divestment target of `56,500 crore for FY 17 in the Union Budget on February 29,2016. The BSE PSU has risen by 12.4% from the January till date with earnings per share of `278.89. The benchmark Sensex has gained 5.4 % during this period.

According to Securities and Exchange Board of India (Sebi) rules, a company can buy back shares either from its existing shareholders on a proportion- ate basis through a tender offer, the open market or odd lot holders. In the case of a tender offer, the company has to deposit 25% of the consideration in the es- crow account if the consideration does not exceed `100 crore.

Firms offer buybacks to enhance their value since the shares bought back are extinguished and the earnings per share gets a boost.

Please Wait while comments are loading...

Go to Top