No longer tax-efficient: Cash-starved Coal India may give buyback a miss

The government may have asked several public sector companies, including Coal India (CIL), to go for share buybacks in the current fiscal year, but the state-owned miner is not considering the option owing to its financially weak position.

Most of the subsidiaries of CIL are facing a cash crunch because of slow growth in coal demand, coupled with record high outstanding payment from power generating companies.

“With the amended (income-tax) law, buyback is no longer a tax-efficient method. Earlier, only subsidiaries paid tax on share buybacks, but now the holding company as well as subsidiaries have to pay tax. Almost none of