Coal In­dia Set to End Fis­cal with .₹ 6,000-crore Bo­nanza

Govt asks CIL’s 5 profit-mak­ing units to un­der­take share buy­backs in ad­di­tion to div­i­dend pay­outs

The Economic Times - - Com­pa­nies: Pur­suit Of Profit - De­b­joy.Sen­gupta @times­group.com

Kolkata: Five profit-mak­ing sub­sidiaries of Coal In­dia will hand over about .₹ 6,000 crore to the par­ent com­pany through a mix of share buy­backs and div­i­dends by the end of next month.

This is the first time Cen­tral Coal­fields, South East­ern Coal­fields, Western Coal­fields, Ma­hanadi Coal­fields and North­ern Coal­fields will be pur­chas­ing their own shares. All eight sub­sidiaries of Coal In­dia are un­listed.

“A gov­ern­ment di­rec­tive has asked profit-mak­ing sub­sidiaries of Coal In­dia to un­der­take share buy­backs this year in ad­di­tion to the reg­u­lar div­i­dends they pay to Coal In­dia. As part of this di­rec­tive, the profit-mak­ing sub­sidiaries of Coal In­dia have com­mit­ted around ₹ 6,000 crore,” a se­nior Coal In­dia ex­ec­u­tive told ET.

On a stand­alone ba­sis, Coal In­dia de­clared a net loss of .₹ 39 crore for the third quar­ter of 2016-17, pri­mar­ily be­cause its sub­sidiaries had not paid any div­i­dend to the com­pany and it had to shell out .₹ 3,650 crore for buy­ing back its own sha- North­ern Coal­fields is likely to give close to .₹ 2,000 crore to its par­ent.

In Oc­to­ber last year, Coal In­dia’s buy­back pro­gramme en­tailed pur­chase of 1.7% of its shares. The ini­tial plan in­cluded sub­sidiaries buy­ing back shares from Coal In­dia first. As part of this plan, the boards of these five sub­sidiaries de­cided on buy­ing back shares from Coal In­dia.

The sub­sidiaries’ de­ci­sion to buy back shares was later shelved be­cause the board of Coal In­dia could not agree with Cen­tral Coal­fields’ share val­u­a­tion cal­cu­la­tion. Cen­tral Coal­fields had de­cided to buy back shares of .₹ 1,128 crore.

Nev­er­the­less, the board of Western Coal­fields had de­cided on 25% buy­back from the par­ent at 789 crore. Ma­hanadi Coal­fields was to buy back 23.82% of its eq­uity shares at .₹ 1,029 crore. Ear­lier, the board of North­ern Coal­fields had de­cided on buy­ing back 22.62% of its shares at .₹ 949 crore. “The quan­tum of money to be shelled through buy­back for the rest three sub­sidiaries is likely to change now as the re­spec­tive boards will take fresh de­ci­sions soon,” the Coal In­dia ex­ec­u­tive cited ear­lier said.

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