India’s largest gas distribution firm GAIL has announced a Rs 1,046.35 crore share buyback programme. The firm has made the decision in order to return the surplus cash to its shareholders. Government of India is the largest shareholder of the company.
In a stock exchange filing, the company said its board has approved the buyback of 6.97 crore shares at a price of Rs 150 per share. The shares being bought represent 1.55 per cent of the total number of fully paid-up equity shares.
The company board also declared an interim dividend of 25 per cent for financial year 2020-21. GAIL stock was down 2.2 per cent on the BSE and was trading at Rs 140.75 at 14.15 Hrs. The government owns 51.76 per cent of GAIL and is expected to participate in the share buyback.
It stands to get Rs 583.6 crore from the dividend payout and another Rs 541.5 crore if it participates in the buyback by tendering a proportionate number of shares. The buyback plan of Rs 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 per cent, 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. It holds 51.76 per cent of GAIL, and is likely to participate in the buyback.
