Stocks

Stake sale via buybacks: Centre set to rake in ₹10,000 crore

Surabhi | | Updated on: Jan 20, 2018

Will help govt’s divestment plans in uncertain market conditions

The Centre is hoping to raise at least ₹10,000 crore from share buybacks by cash-rich public sector units this fiscal. PSUs engaged in the metal and mining sector may be given a push for this as they are seen to be cash-rich with little or no expansion plans.

In all, cash and idle reserves of PSUs are estimated at over ₹2.6 lakh crore. “All public sector units that are sitting on idle cash will be expected to go for share buybacks. We hope to raise at least ₹10,000-15,000 crore from such transactions this fiscal,” said a government official, noting that this will aid the process of public offers in raising revenue from disinvestment.

Coal India, BHEL Apart from National Aluminium Company (Nalco) that had on Wednesday announced plans to buy back 64.43 crore shares worth close to ₹2,835 crore, other PSUs including Coal India and BHEL too are likely to go in for share buybacks.

Sources said the Finance Ministry is in talks with nodal ministries on the issue. The Department of Investment and Public Asset Management (DIPAM) had in 2015-16 also resorted to prodding PSUs to buy back their shares. It raised ₹4,500 crore through share buy backs by Hindustan Aeronautics and Bharat Dynamics last fiscal.

The current year Budget has targeted raising ₹36,000 crore from disinvestment proceeds, which officials say could be difficult. While DIPAM has a list of 16 PSUs for minority stake sales this fiscal, officials concede that market conditions can at any time become adverse and impact its plans.

“The success in PSU share buyback last fiscal has shown that this is a good alternative to public offers,” said an official.

Till now this fiscal, the Centre has raised ₹2,700 crore from the 11.36 per cent stake-sale in NHPC.

Published on May 26, 2016
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