Cairn India, armed with a net cash balance of $3.1 billion (of which $2 billion was generated in FY13), proposes to roll out a share buy back offer when its board meets on November 26.
The company said this in an exchange filing on Friday.
Promoters hold 58.76 per cent in Cairn India of which Twin Star Mauritius holds 38.67 per cent, Sesa Goa 18.38 per cent and Sesa Resources 1.71 per cent.
Major non-promoter shareholders include Cairn UK Holdings (10.27 per cent), LIC (8.78 per cent) and ICICI Prudential Dynamic Plan (1.08 per cent).
About 2.5 lakh individual retail investors control 2.5 per cent stake in the company.
Buyback offers are used by cash-rich companies to reward shareholders by reducing the company’s equity base and shoring up its financial ratios, which eventually pushes up the market price of the company’s shares.
SEBI had tightened buyback norms this August by stipulating that companies cannot buy back more than 15 per cent of their equity capital through open market. Buyback offers have to be completed within six months of launch as against the earlier tenor of one year.
SEBI also mandated that companies had to buy back at least half of the amount set aside for the buyback.
Companies also need to deposit 25 per cent of the buyback amount in a separate escrow account in the form of cash and bank guarantee with a minimum cash deposit of 2.5 per cent of the buyback offer.
On Friday, the Cairn India scrip closed at Rs 326.95 on the BSE, up three per cent.