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State-run Coal India Ltd (CIL) today said its board has approved buyback of 10.89 crore shares worth Rs 3,650 crore.
"The company by way of special resolution... Has approved the buyback of not exceeding 10.89 crore equity shares of the company... At a price of Rs 335 per equity shares payable in cash for an aggregate consideration of Rs 3,650 crore," CIL said in a BSE filing.
The Finance Ministry is pushing for buyback of shares by central public sector enterprises. This is being done for two purposes — to generate cash for the government and help push the valuation for any divestment.
In the last one year, CIL has seen depletion in its cash reserve by 18%, or Rs 8,700 crore, to Rs 38,300 crore as on March 2016. The government has set a disinvestment target of Rs 56,500 crore for 2016-17. Of this, Rs 36,000 crore is expected to come from minority stake sales.
CIL Board will deliberate on cash outgo due to the buyback and its long-term investment plan to meet Coal Ministry's target of one billion tonne output by 2020.
The Centre also needs to bring down its stake in CIL below 75% to adhere to Securities and Exchange Board of India norms. The deadline for ensuring this is August 2017.Coal India's shares were trading 1.14% down at Rs 316.85 apiece on BSE in the morning trade.
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