India’s largest oil and gas producer, ONGC on Friday said that its board will consider buyback of the fully paid-up equity shares of the company on a meeting to be held on December 20.
The government is looking to bridge the budgetary deficit through higher receipts of dividend and selling its shares in cash-rich PSUs.
The repurchasing of the shares by the company that issues them are known as stock buybacks. This occurs when the issuing company pays shareholders the market value per share and re-absorbs that portion of its ownership, that was previously distributed among public and private investors.
“The meeting of Board of Directors of the company will be held on Thursday, December 20, 2018, inter-alia, to consider the proposal for buy-back of the fully paid-up equity shares of the company.”, said ONGC.
The government holds 67.48 percent stake in ONGC and is expected to participate in the share buyback. State-owned firms like BHEL, Coal India, and Oil India Ltd. are expected to raise minimum ₹5,000 crores through share buyback. The government is expected to participate in each of the share buyback programmes of these PSUs
The Department of Investment and Public Asset Management (DIPAM) had poked all cash-rich PSUs to go in for share buybacks.
PSUs having a net worth of at least ₹2,000 crores and a cash balance of more than ₹1,000 crores have to mandatorily go in for share buyback.
On Thursday, state-owned Indian Oil Corp (IOC) said it will buy back 29.76 crore shares for about ₹4,435 crores and spend another ₹6,556 crores on paying an interim dividend to shareholders. Its board has approved buyback of up to 29.76 crore equity shares, or 3.06 percent, at ₹149 per share. It also stated that its board has declared an interim dividend of 67.5 percent or ₹6.75 per share for fiscal 2018-19.
The total dividend payout, excluding tax, would be ₹6,556 crores, of which the government will get ₹3,544 crores plus the dividend distribution tax.