FinMin shortlists Coal India, NTPC, dozen other CPSEs for share buyback

Illustration: Ajay Mohanty

The Finance Ministry has shortlisted about a dozen companies, including Coal India, NTPC, NALCO and NMDC, for a possible buyback of shares in the ongoing financial year.

The other companies which are in the list include NLC, BHEL, NHPC, NBCC, SJVN, KIOCL and Hindustan Aeronautics, officials said.

Earlier this week, the Department of Investment and Public Asset Management (DIPAM) discussed buyback option with these companies, following which the list has been drafted.

These CPSEs have been asked to buyback the shares following the capital restructuring guidelines set out by DIPAM on May 27, 2016.

Officials however said in view of the business plans of CPSEs, not all in the list would be able to buyback the shares in 2018-19.

As per the guidelines, CPSEs having net worth of at least Rs 20 billion and cash and bank balance of above Rs 10 billion have to mandatorily go in for share buyback.

It had also asked every CPSE to analyse in the first board meeting after the closure of a financial year the cash and bank balance, expansion plans, borrowing plans, net worth and market value of shares and explore option for buying back of shares.

Share buybacks offer a route for companies to return some wealth to their shareholders, while potentially boosting their stock prices.

In a share buyback, a company will absorb or retire the repurchased shares, and rename them treasury stock.

Buying back stock is also a route to make a business look more attractive to investors. By reducing the number of outstanding shares, a company's earnings per share ratio is automatically increased.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel