GAIL ANNOUNCES ₹1,046.35 CRORE SHARE BUYBACK

NEW DELHI: GAIL (India) Ltd, the nation’s largest gas distribution firm, on Friday announced a ₹1,046.35 crore share buyback programme as it looked to return surplus cash to shareholders, the biggest being the government of India.

In a stock exchange filing, the company said its board has approved the buyback of 6.97 crore shares at a price of ₹150 per share.

The shares being bought represent 1.55% of the total number of fully paid-up equity shares.

The company board also declared an interim dividend of 25% (₹2.50 per share) for financial year 2020-21.

The government owns 51.76% of GAIL and is expected to participate in the share buyback.

It stands to get ₹583.6 crore from the dividend payout and another ₹541.5 crore if it participates in the buyback by tendering a proportionate number of shares. The buyback plan of ₹1,046.35 crore represents “2.5% and 2.26% of the aggregate of the fully paid-up equity share capital and free reserves of the company,” GAIL said in the filing.

The plan was within the statutory limits of 10%, it said.

The record date for buyback of equity shares as well as payment of the interim dividend will be January 28, GAIL said.

The government has asked at least eight state-run companies to consider share buybacks as it scours for ways of raising funds to rein in its fiscal deficit.

The firms asked to consider share buybacks include miner Coal India, power utility NTPC, and minerals producer NMDC.

The government wants public sector undertakings to either meet their targets for capital expenditure or “reward the shareholder in the form of a dividend” or share buyback.

Finance minister Nirmala Sitharaman had in her budget for 2020-21 set a target of raising ₹2.1 lakh crore from privatisations and the sale of minority stakes in state-owned companies.

THE GOVERNMENT OWNS 51.76% OF GAIL AND IS EXPECTED TO PARTICIPATE IN THE SHARE BUYBACK