Coal India has agreed to part with nearly Rs 6,000 crore from its cash reserves of over Rs 38,000 crore for a share buy-back mooted by the finance ministry after ensuring that its capex plans to up production would not be impacted.
Officials in the company said, so far, four of its subsidies has agreed to a share buy-back.
As per the official, this buyback will not have any impact on the future plans of Coal India’s capital expenditure (capex). Back in September 2015, the Maharatna company had worked out a capex plan of Rs 57,000 crore over a period of five years to propel growth in output which was to be partly funded by its cash reserves. However, with the government making its move to pump out part of the reserves to drive growth in other sectors, the overall reserves are likely to decline.
Under the share buy-back programme, Coal India will be purchasing around 2-3% of its shares from the government – a move which will help the centre move an inch closer to the Sebi guidelines.
Sebi guidelines have stated the public should hold 25% in state-owned listed companies by August 2017. Currently, the President of India holds 79.65% in the company resulting in the public having access to only 20.35% of the shares.
The buy-back will not just reduce the stake of the government, it will also prepare the ground for the 10% additional planned disinvestment in the world’s largest coal miner.
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