Reuters Feb 2, 2016, 04.37PM IST
(The buybacks will help the…)
NEW DELHI | BHUBANESWAR: Coal India Ltd is likely to buy back shares worth at least 25 billion rupees ($368 million) from the government, a source familiar with the matter said, as the finance ministry looks to state firms for cash ahead of the federal budget.
The government has also written to aluminium maker NALCO, asking it to buy back 25 per cent of its shares from the government worth 32.5 billion rupees ($478 million).
Chairman Tapan Kumar Chand told Reuters on Tuesday the company would likely appoint state-controlled SBI to advise it before a board meeting on February 11 to consider the government’s request.
Coal Secretary declined to comment on the Coal India buyback and so did Finance Ministry spokesman D.S. Malik. But the source cited above said a decision would be taken by the company’s board in a few days.
A Coal India spokesman could not be immediately reached for comment.
The buybacks will help the government partly make up for a funds shortfall in its ambitious target for state companies ahead of the budget later this month.
The cabinet last year planned a slew of divestments in state-owned companies, including sales of 10 per cent each in Coal India and NALCO. But the programme failed to get traction as a commodities downturn cut investor appetite.
The government currently owns 79.65 per cent in Coal India, which has a market value of more than $30 billion, according to Thomson Reuters data. The request for buybacks would amount to a stake of more than 1 per cent at current prices.
Coal India had more than $9 billion in cash and short-term investments as of the September quarter, according to Thomson Reuters data.
Still, a buyback would put pressure on the world’s largest coal miner, which is fast burning through its cash horde as it expands aggressively to meet the government-set target of doubling output this decade.