Indian Oil Corporation has announced share buyback of over 29.76 crore shares and also decided to give interim dividend at the rate of ₹6.75.

These decisions will benefit the government and over 4.68 lakh investors of the company which also include 4.5 lakh individual investors. All the investors who are on the books of the company as on December 25, (record date) will be eligible for the buyback and interim dividend. These decisions were taken at the board meeting held here on Thursday.

According to a regulatory filing, “Buyback of equity shares of the company not exceeding 29,76,51,006 equity shares being approximately 3.06 per cent of the total paid-up equity share capital of the company at a price of ₹149 per equity share payable in cash for an aggregate consideration not exceeding ₹4,435 crore…” All equity shareholders of the company, as on the record date, will be allowed to tender shares on proportionate basis.

“The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the buyback regulations,” the company said. The buyback price is at an 8.6 per cent premium to Thursday’s closing price of IOC’s stock on the BSE.

The IOC stock closed 0.5 per cent higher at ₹137.20 on the exchange. The government, which holds 54.06 per cent stake in the company, is expected to participate in the share buyback. Back-of-the-envelop calculation shows the government could get up to ₹2,400 crore through the buyback.

The government is targeting a minimum ₹5,000 crore through share buyback offers of various Central Public Sector Undertakings (CPSUs) such as Coal India, BHEL and Oil India. Besides IOC, at least half a dozen other central CPSUs have disclosed share buyback programmes. These include NHPC, BHEL, NALCO, NLC, Cochin Shipyard and KIOCL.

The Department of Investment and Public Asset Management (DIPAM), which has a target of raising ₹80,000 crore for the government through stake-sale in CPSEs, had prodded all cash-rich PSUs to go for share buybacks. CPSUs having a net worth of at least ₹2,000 crore and cash balance of more than ₹1,000 crore have to mandatorily go in for share buybacks. Of the ₹80,000-crore disinvestment target, the government has so far raised just over ₹15,000 crore through minority stake-sale in PSUs.

Interim dividend

The board of directors declared an interim dividend of 67.5 per cent or ₹6.75 a share (face value ₹10) for the financial year 2018-19. The dividend will be credited to the account of the shareholders or the dividend warrant in respect thereof will be dispatched on or before December 31.

The government is expected to get ₹3,544 crore, apart from dividend distribution tax on the entire amount of dividend.

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