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
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.