Demonetisation boost: Security Printing and Minting Corporation may buy Rs 450 cr of own shares

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New Delhi | Updated: December 22, 2017 7:12:17 AM

Having improved its balance sheet thanks to the new bank notes printed following demonetisation, the state-run Security Printing and Minting Corporation of India (SPMCIL) will likely buy back Rs 450 crore of its own shares from the government this month.

Demonetisation, Printing and Minting Corporation, Bharatiya Reserve Bank Note Mudran, Rail Vikas Nigam, PSUs, Reserve Bank of India, india, Oil India, Engineers India and Bharat Dynamics  More firms are likely to follow this route soon. Rail PSUs Ircon International, Rail Vikas Nigam and RITES are likely to undertake buyback of their own shares before their initial public offerings hit the market later this year. (PTI)

Having improved its balance sheet thanks to the new bank notes printed following demonetisation, the state-run Security Printing and Minting Corporation of India (SPMCIL) will likely buy back Rs 450 crore of its own shares from the government this month. “The SPMCIL board has recently approved a proposal to buy back shares,” an official told FE. The company, which prints about 40% of the banknotes in circulation in India, reported a huge 166% increase in net profit to Rs 542 crore in FY17 thanks to higher business due to the orders from the Reserve Bank of India for replenishment of the notes in circulation after demonetisation on November 8, 2016. Its net profit was Rs 203 crore in FY16 while it suffered a net loss of Rs 352 crore in FY15. SPMCIL and Bharatiya Reserve Bank Note Mudran played a key role in the re-monetisation exercise after the scrapping of the old Rs 500 and Rs 1,000 banknotes. As a result, RBI spending on security printing more than doubled year-on-year to Rs 7,965 crore in FY17. New notes’ printing and other expenses related to demonetisation largely contributed to the RBI dividend payment falling short of the target by Rs 27,341 crore in FY18.

So far this year, Oil India, Engineers India and Bharat Dynamics have exercised the option to buy back shares worth Rs 2,243 crore from the government. More firms are likely to follow this route soon. Rail PSUs Ircon International, Rail Vikas Nigam and RITES are likely to undertake buyback of their own shares before their initial public offerings hit the market later this year.

Last year, the government had asked PSUs to undertake buyback of shares as per the new rules that mandated each PSU with a net worth of above Rs 2,000 crore and cash and bank balance of over Rs 1,000 crore to exercise the option. Seven PSUs bought back shares worth Rs 18,963 crore or 41% of the total disinvestment receipt of Rs 46,247 crore in 2016-17.

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