KOLKATA: Five subsidiaries of Coal India will buy back up to 25 per cent of their shares from the parent so that the coal monopoly can go ahead with its own share buyback offer to the government and the public, officials said.
Central Coalfields, Mahanadi Coalfields, Northern Coalfields, South Eastern Coalfields and Western Coalfields will buy back more than 10 per cent of their shares from Coal India, adding around Rs 5,000 crore to the latter’s kitty, it was decided at a nine-hour meeting between Coal India and government officials last week, sources said.
The government is looking at raising at least Rs 6,000 crore from Coal India buyback.
A senior government official said the quantum of CIL’s buyback offer will depend on the amount of money that Coal India receives through share buyback by subsidiaries. “Subsidiaries have been asked to start the process as soon as possible,” the person said on condition of anonymity.
If Coal India’s buyback offer is for less than 10 per cent stake, then its board can approve the decision. However, if it’s more then the company would need to seek shareholders’ approval through an extraordinary general meeting.
It has eight wholly owned subsidiaries. Although all these are profit making firms, three of them are spared from the buyback exercise — Eastern Coalfields and Bharat Coking Coal, both of which have just come out of the ambit of BIFR, and Central Mine Planning & Design Institute, a consultancy and exploration arm that is not financially strong. Being 100 per cent owned by Coal India, boards of the five subsidiaries will decide the quantum and price at which they would buy back shares, depending on their cash reserve position.
According to officials, Mahanadi Coalfields, Northern Coalfields and South Eastern Coalfields are expected to buy back 25 per cent of their shares from CIL BSE 0.96 %, while the percentage of share to be bought back by Western Coalfields and Central Western Coalfields will be decided on the basis of funds available with these companies as of March 2016, since they are financially not very strong.
Source: Economic Times