The government shareholding in Engineers India Ltd (EIL) has fallen to 54.17% after it sold some shares under the company’s buyback programme. It had 57.02% in EIL prior to the launch of the Rs658.80 crore share buyback on 25 July.
The 41.9 million share buyback plan at Rs157 apiece closed on 7 August. In a regulatory filing, EIL said the government cornered 99.96% of the buyback programme. EIL said it has bought 41.9 million equity shares and extinguished them.
This has resulted in equity base shrinking to 63.19 crore shares from 67.38 crore shares previously. Promoter holding came down from 38.42 crore shares (57.02% of total) to 34.22 crore shares (54.17%), it said, adding that the holding of public and other institutional investors has risen from near 43% to 45.83%.
The buyback price announced was less than Rs164.95 rate at which EIL shares were trading on the previous trading day. It was trading at Rs150.40 on BSE at 2 pm. The board of directors of EIL had on 20 March 2017 approved the share buyback.
Shareholders approved the proposal through postal ballot in June. Share buyback is the acquisition by a company of its own shares. The objective is to return surplus cash to shareholders. The government has encouraged cash-surplus PSUs to go for share buybacks to meet its disinvestment target.
For the current fiscal, 2017-18, it has set a target of raising Rs72,500 crore through minority sales, strategic disinvestments as well as through listing of state-owned insurance companies. EIL is a Navratna public sector unit under the administrative control of the ministry of petroleum and natural gas.
It is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas, petrochemicals, fertiliser and LNG industry segments in India and internationally.
The company also operates in other sectors including non-ferrous mining and metallurgy, waste water and infrastructure. Besides, it is a primary provider of engineering consultancy services for the government’s energy security initiative under its Integrated Energy Policy for strategic crude storages.
Source: Mint