The board of public sector Coal India Ltd. on Monday approved a proposal to buy back 1.72 per cent of its shares at a price of Rs.335 per share.
This would aggregate to an amount of Rs.3,650 crore. The board, at a marathon seven-hour meeting in New Delhi, decided that the buyback would be funded out of CIL’s cash reserves.
All four functional directors of CIL, four independent directors, a government nominee and CIL’s Chairman S. Bhattacharya were present at the meeting.
The proposal was mooted by the government last December, as it was felt that the uncertainty in commodity and stock markets had dimmed the prospect of another round of divestment. The government now holds 79.65 per cent of CIL’s equity. This move, insiders say, will generate revenue for the government while improving CIL’s valuation for a subsequent divestment.
The buy-back would be financed from CIL’s (standalone) reserves.
The earlier proposal of doing this through its five subsidiaries has been deferred following valuation problems. The CIL stock rose 2.8 per cent to close at Rs.320.50 on the BSE.
