Share buyback likely to put additional burden on finances of PSUs

The finance ministry has short listed 11 PSUs for a possible buyback of shares in the ongoing financial year

The government’s plan to meet divestment target through share buybacks by large public sector undertakings (PSUs) is likely to put additional burden on their already strained balance sheet. Listed PSUs (excluding banks and oil & gas companies) reported net debt to equity ratio of 0.7x in FY18 (on average), which is the highest in FY18 and up from 0.54x a year ago. 

The last time that PSUs were debt free on a net basis was in the fiscal year ending March 2012. 

According to media reports, the finance ministry has short listed 11 PSUs for a possible buyback of shares