Reported By:
| Edited By: Sumit Moitra |Source: DNA |Updated: Mar 18, 2018, 06:16 AM IST
Coal India has decided to buy back its own shares, paving a roundabout way for its majority shareholder, the government, to meet its disinvestment target.
The near-monopoly coal producer will seek shareholder approval at its upcoming annual general meeting (AGM) on September 18 to amend its Articles of Association in order to facilitate the buyback.
“Resolved that pursuant to section 31 and other applicable provisions, if any, of the Companies Act 1956, the Articles of Association of the company be altered to include clause 18A after clause 18 to provide for buyback of shares,” the company has said in the notice for the resolution to be placed before its shareholders at the AGM.
A Coal India official told DNA the amendment has been proposed in accordance with a March 26 directive from the Department of Public Enterprises and was approved by the company board on May 28. “It now has to be approved by the shareholders before it can be applied under Sebi’s (the Securities and Exchange Board of India’s) buyback regulations.”
The buyback will help a government desperate to revive the economy and send out the right signals to investors meet its disinvestment target for the year.
Finance minister P Chidambaram and his officials, including secretaries of economic affairs and disinvestment, met recently to review the roadmap for this fiscal. The officials were asked to ensure that the initial target of Rs30,000 crore for 2012-13 is achieved.
To be fair to the government, Coal India’s bulging cash balance — cash and cash equivalent of nearly Rs55,000 crore — has found little productive use so far. With little avenues for productive investments in new mine development and also into acquisition of assets abroad, Coal India’s huge cash pile stays idle at mutual fund houses, earning dividends and interest. In fact, its other income during the first quarter of this year went up by a whopping 32%, touching Rs2,000 crore on the back of higher treasury yield.
But it would take more to meet the target. Five months into the fiscal, the disinvestments have yet to roll. The IPO of RINL was deferred twice, putting a question mark on follow-on offers of SAIL, BHEL, NMDC and Oil India.
