Oil India has joined the long list of companies offering to buy back their shares. It has decided to buy back 4.49 crore shares for R1,527.01 crore, the company said in a regulatory filing on Monday. It set April 5, 2017, as the record date to decide on the eligible shareholders. The offer represents 5.6% of the total equity paid-up capital of the company. In CY2016, firms spent more than Rs 26,853 crore on buybacks, the highest since 2011, and PSU buybacks constituted more than 62%. Of these, NMDC’s buyback offer of R7,519 crore was the biggest. The other PSUs with buyback offers in CY2016 include MOIL, Coal India and Bharath Electronics.
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The OIL buyback offer is for Rs 340 per share, 2% above its closing price of Rs 333.10 on the BSE on Monday. The company had cash and cash equivalents of R9,882.8 crore as on March 2016, data from Bloomberg showed.
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 R10 lakh a year.