In a meeting with Board of Directors of Coal India held yesterday i.e. on July 11, 2016, a final decision was taken into consideration as of giving approval for buyback of equity shares. The shares ought not to exceed more than 10.89 crores stakes of the company.
The shareholders’ may hold it on a proportionate basis through the tender offered at a route price of Rs. 335 per share payable in cash thus not exceeding to 3650 crores INR with an increase of 25% of the total entirely paid share capital along with free reserves of the company. As per the audited accounts for the financial year closed by the end of March 2016, anannouncement of buyback of equity shares was made just after the market hours.
The meeting held on the board of directors elongated for 7 hours in which crucial decision was made so as to liberate Coal India Ltd. cash reserve. All the four directors, four independent directors, government nominee and Chairman S. Bhattacharya were present. The respective proposal was initiated by the government last year in December.
One of the sole reason behind the repurchases of the Outstanding shares is to reduce the number of shares in the market. Also, the diminishing of uncertain commodity and stock markets urged the prospect of another round of divestment.
Currently, thecentre holds a percentage share of 79.65 of total equity. Perhaps, such moderate step would generate revenue from the government while improving firms valuation for a subsequent divestment. As of now, the buyback will be financed by Coal India’s standalone reserves. Earlier, such similar proposal was denied and deferred due to valuation problems through the help of its five subsidiaries.
In BSE filing, CIL rose by 3.1% thus closing at Rs. 331.75.