BackCoal India said to buy back shares worth at least $368 mn from govt: report
The govt has also written to NALCO, asking it to buy back 25% of its shares from the govt worth Rs3,250 crore
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New Delhi/Bhubaneswar: Coal India Ltd is likely to buy back shares worth at least Rs2500 crore ($368 million) from the government, people familiar with the matter said, as the finance ministry looks to state firms for cash ahead of the union budget.
The government has also written to aluminium maker NALCO, asking it to buy back 25% of its shares from the government worth Rs3,250 crore ($478 million).
NALCO chairman Tapan Kumar Chand told Reuters on Tuesday the company would likely appoint state-controlled SBI to advise it before a board meeting on 11 February to consider the government’s request.
Coal secretary Anil Swarup declined to comment on the Coal India buyback and so did finance ministry spokesman D.S. Malik. But the source cited above said a decision would be taken by the company’s board in a few days.
A Coal India spokesman could not be immediately reached for comment.
The buybacks will help the government partly make up for a funds shortfall in its ambitious divestment target for state companies ahead of the federal budget later this month.
India’s cabinet last year planned a slew of divestments in state-owned companies, including sales of 10% each in Coal India and NALCO. But the programme failed to get traction as a commodities downturn cut investor appetite.
The government currently owns 79.65% in Coal India, which has a market value of more than $30 billion, according to Thomson Reuters data. The request for buybacks would amount to a stake of more than 1% at current prices.
Coal India had more than $9 billion in cash and short-term investments as of the September quarter, according to Thomson Reuters data.
Still, a buyback would put pressure on the world’s largest coal miner, which is fast burning through its cash horde as it expands aggressively to meet the government-set target of doubling output this decade. Reuters
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