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Govt asks PSUs to buy back shares, pay higher dividends

15 Feb 2016 Evaluate

Government has asked public sector firms cash-rich Coal India, National Aluminium Co (Nalco), NMDC and MOIL, among half a dozen PSUs, to buy back shares worth about Rs. 25,000 crore and pay additional dividend than the mandated 30 per cent of net profit or 30 per cent of government's equity holding, whichever is higher. The share buyback is being proposed as disinvestment target looks set to be missed for the sixth consecutive year and 16th time since the stake sale began in early 1990s.

Besides, Nalco has been asked to consider buying back 25 per cent shares while the world's largest coal producer CIL has been asked to consider 10 per cent buyback. A 10 per cent share buyback has also been proposed in case of MOIL, NMDC and India Renewable Energy Development Agency among others. The firms identified for the share buyback have a cumulative cash balance of over Rs. 78,000 crore. Cash-rich PSUs like Coal India has also been asked to issue bonus shares.

Nalco would have to shell out Rs. 2,023 crore for the share buyback, for a 10 per cent buyback NMDC would have to cough up Rs. 3,120 crore. Besides, Coal India would have to spend Rs. 19,170 crore, for a 10 per cent share buyback the same for MOIL would be Rs. 309 crore.

For the current fiscal year, the government so far has mobilised just Rs. 13,330 crore from sale of stakes in PSUs as against the budgeted target of Rs. 69,500 crore. So far the big PSUs like ONGC, IOC, Oil India, GAIL, BPCL, HPCL and NTPC have paid about Rs. 5,763 crore in interim dividend for 2015-16 fiscal. Coal India is yet to declare dividend.

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