With an aim to get state-run companies, including unlisted ones, to leverage their balance sheets better and raise more loans from the market, the government has begun a mega exercise to get public sector companies (PSUs) to buy back their shares and take a slice of the estimated Rs 2.6 lakh crore lying idle with them. The companies which have high cash and low debt are the focus area.
This move will be especially helpful in case of companies which are currently unlisted and may go for a listing later. Further it will help the government raise resources; it will also help the PSUs improve the earning per share as the number of shares will come down.
Earlier, the exercise was being driven by the department of disinvestment to meet the shortfall from lower disinvestment during the current financial year, which has now been taken under with the public asset management along with the department of public enterprises. It has now got bigger and is part of a larger government strategy. Under the exercise, the list of companies is being prepared based on their capital expenditure plans. For a buyback, companies with surplus cash would dip into their reserves, repurchase the shares and transfer the money to the shareholders, led by the government.