NLC India said in a regulatory filing on Thursday it has completed the buyback of 14.91 crore shares worth `1,476 crore.
NLC India said in a regulatory filing on Thursday it has completed the buyback of 14.91 crore shares worth `1,476 crore.The buyback was made from all the existing shareholders of the company on a proportionate basis under the tender offer route. The buyback was subscribed by 1.034 times with shareholders returning 15.42 crore shares in response to the offer.IDBI Capital was the manager to the buyback. Post buyback the promoters holding has been reduced to 89.325 from 90% earlier.
In CY 2016 firms spent more than `26,853 crore on buybacks, the highest since 2011 and PSU buybacks constituted more than 62% of these offers. NMDC’s buyback offer of `7519 crore was the biggest during CY16. The other PSUs which came with buyback offers in CY 2016 include MOIL, Coal India, and Bharath Electronics.
Buyback is the process by which a company repurchases its own shares from its stakeholders. The bought back shares are extinguished and the company’s equity base shrinks.
Buybacks have become the preferred route over dividends, as dividend income in the hands of all residents, domestic companies, trusts or funds except those established for religious, educational or charitable purposes, attracts an additional dividend tax of 10 % dividend income over `10 lakh a year.
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Moreover, buybacks have become one of the preferred routes for the government to achieve its disinvestment target. Of the `46,246.28 crore raised by the government through the disinvestment route in this financial year, `18,963.55 crore came through buybacks.
Besides buybacks, the government has raised `8003.87 crore through offers for sale in various public sector undertakings, another `8498.98 crore through the second tranche of central public sector enterprises’ (CPSE) exchange traded fund (ETF).