GAIL to issue bonus shares in six months

GAIL (India), the country's largest gas transmission and marketing company, will, in all likelihood, finalise a bonus issue of shares within the next six months.

The state-run company is initiating the process by doubling its authorised share capital to Rs 2,000 crore.

The proposal for increasing the capital is likely to be taken up by the board soon.

"We will first increase the authorised capital to Rs 2,000 crore. Then, we will take the bonus share issue to the board in the next three-six months and seek shareholder nod once the issue is approved," Chairman and Managing Director UD Choubey told Business Standard.

Though Choubey declined to give the bonus issue ratio, a Mumbai-based analyst tracking the company said: "Since GAIL is in the process of doubling its share capital, the bonus issue is likely to be in a ratio of 1:1."

He added that the bonus issue was on the company's agenda since the last annual general meeting earlier this year.

According to the Department of Public Enterprises (DPE) guidelines, central government-owned public sector enterprises with reserves of more than three times their paid-up capital are expected to declare bonus shares to shareholders.

GAIL meets these guidelines. "A bonus issue has been a demand from our shareholders," a senior GAIL official said.

Other public sector companies, such as Indian Oil Corporation (IOC), the country's largest company by revenues, have also been urged to consider bonus issues, under DPE guidelines.

GAIL's paid-up capital currently is Rs 845 crore, which will be increased once the authorised share capital rises to Rs 2,000 crore.

"There should not be any problems in approving either the increase in authorised capital or the issue of bonus shares," the GAIL official said.

The company, which had a turnover of Rs 16,000 crore last financial year, saw its share price on the Bombay Stock Exchange touch a life-time high of Rs 549.90 on December 13.

Its stock has risen 7.99 per cent to Rs 479.55 on BSE in the last one month, compared with a 0.61 per cent dip in the benchmark Sensex during the period.

IN THE PIPELINE

GAIL to finalise bonus issue of shares in the next three to six months

Company doubling authorised share capital to Rs 2,000 cr to initiate process

The bonus issue is likely to be in a ratio of 1:1

According to guidelines, PSUs with reserves of more than three times their paid-up capital are expected to declare bonus shares