Coal India BSE 0.26 % (CIL) does not have to buy back shares from the government this year, having handed out a hefty dividend last week to please its investors, a senior official said.
Coal India chose the second option, declaring a hefty dividend of Rs 27.4 per share, handing over the government a total of Rs 17,308 crore excluding taxes, a senior Coal India official said. “Taxes would raise the figure to Rs 20,830 crore,” the person said. “Bulk of this would have to be paid from reserves depending on the profit Coal India earns this year. Lower the profits higher the amount that needs to be used from reserves.”
The buyback is likely to bring down the government’s stake in Coal India to a maximum of 76% from the present level of 79.65%.
Coal India has already appointed SBI Caps as an advisor for the buyback exercise since it is the only public sector merchant banker with experience of buyback in a public sector company.
With the stock markets not doing very well, the Centre is not likely to go ahead with its plan of an additional 10% stake divestment in the company this fiscal. However, the buyback will be followed by an additional divestment that would bring down the Centre’s stake in the company below 75% and help Coal India adhere to Sebi norm of at least 25% public holding in listed companies. The deadline for at least 25% public holding in all listed PSUs is August 2017.