Oil India announces buyback of 50.4 mn shares for ₹1,085 cr

NEWDELHI: State-owned Oil India Ltd (OIL) will buy back 50.4 million of its shares for a little over ₹1,085 crore as part of the government’s push to cash-rich Public Sector Undertakings (PSUS) to part with their surplus either by paying higher dividends or through share buybacks so as to help meet revenue targets.

In a regulatory filing, OIL said its board has approved buyback of shares at an aggregate of no more than 10 per cent of the fully paid-up equity share capital and free reserves of the company.

The board approved “the buyback by the company of its fully paid-up equity shares of ₹10 each not exceeding 5.05 crore equity shares (representing about 4.45% of the total number of equity shares in the paid-up share capital of the company) at a price of ₹215 per equity share payable in cash for an aggregate consideration not exceeding ₹1085.72 crore,” it said.

The nation’s second large oil explorer had a little less than ₹20,000 crore of reserves.

OIL shares closed at ₹218.78 on the BSE on Thursday. Friday was a trading holiday on account of Gurunanak Jayanti.

The government is targeting a minimum ₹5,000 crore through share buyback offers of stateowned firms like Coal India and Bharat Heavy Electricals Ltd (BHEL). Besides OIL, at least half a dozen other central PSUS have disclosed share buyback programmes. Prominent among these include NHPC Ltd, BHEL, National Aluminium Co. Ltd, NLC India Ltd, Cochin Shipyard Ltd and KIOCL Ltd that could fetch the government a little over ₹3,000 crore.

The government is expected to participate in each of the share buyback programme of these PSUS.

OIL said the government holds 66.13% stake in the company and has offered to tender 5.04 crore shares in the buyback offer.

The Department of Investment and Public Asset Management (DIPAM), which has been set a target to raise ₹80,000 crore for the government through stake sale in central public sector enterprises, had prodded all cash-rich PSUS to go for share buybacks.

PSUS having a net worth of at least ₹2,000 crore and a cash balance of more than ₹1,000 crore have to mandatorily go in for share buyback.