 "A worker sprays water over piles of coal at Mundra Port Coal Terminal in Gujarat. Photo: Reuters")
Coal India's two subsidiaries Mahanadi Coalfields and Northern Coalfields will buyback total shares worth around Rs 1,978 crore from their shareholders.
The board of directors of Mahanadi Coalfields Limited on June 11 "has considered and approved the buyback of 4,43,973 fully paid equity shares of face value of Rs 1,000 each from the members of the company on a proportionate basis through tender offer," CIL said in a regulatory filing.
The MCL buyback will represent 23.82% of the total number of equity shares in the paid-up share capital of MCL for an aggregate amount not exceeding Rs 1,028.77 crore, maximum buyback size, being up to 25% of the paid-up equity share capital and free reserves as on financial year ended March 31, 2016, it said.
The buyback will be at a price of Rs 23,171.89 per equity shares payable in cash, the filing said.
The Board of Directors of Northern Coalfields Limited (NGL) also approved the buyback of 4,01,827 fully paid equity shares of face value of Rs 1,000 each from the members of the company on a proportionate basis through tender offer for an aggregate amount not exceeding Rs 948.72 crore, according to a separate filing.
The buyback represents 22.62% of the total number of equity shares in the paid-up share capital of the NGL. The company's board has approved buyback at a price of Rs 23,610.04 per equity shares payable in cash.
The government has approved buyback of shares by PSUs as it feels leveraging surplus cash would be the best option for them rather than going for disinvestment. The rich PSUs are estimated to be sitting on cash pile of Rs 2.6 lakh crore.
Buy-back helps a company to reduce equity by using idle cash and hence provide better returns to shareholders.
