GAIL board approves Rs 1,046 crore share buyback

Updated : January 15, 2021 05:50 PM IST

In a regulatory filing on Friday, public sector utility GAIL (India) Ltd. has announced a Rs 1,046.35 crore share buyback programme. The company's board approved a buyback of over 6.97 crore fully-paid equity shares, which represent 1.55 per cent of the total number of fully paid-up equity shares in the company. The buyback was approved at a price of Rs 150 per equity share.

The company's move is aimed at returning surplus cash to its shareholders, including the government. GAIL (India) is the largest gas distribution company in the country.

The company's board also approved payment of interim dividend of Rs 2.50 per share, or 25 per cent, for fiscal 2020-21, and fixed January 28 as the record date for determining the eligibility of shareholders for buyback of equity shares as well as payment of the interim dividend. The company also made it clear in the regulatory filing that the buyback offer didn't include expenses incurred for the process.

According to a Business Standard report, shares of GAIL were down 5 per cent at Rs 136.60 in the intra-day trade, falling 7 per cent from day's high, after the board approved the buyback.

For the uninitiated, a share buyback is a decision by an organisation to buy its own shares from the open market. It reduces the number of outstanding shares and tends to increase the value of the remaining shares by reducing supply. It is also a way to transfer surplus earnings to shareholders.

The Central government has a share of 51.76 per cent in GAIL and may participate in the buyback. Foreign investors owned 15.74 per cent in the company.

To rein in its fiscal deficit and raise funds, the government has asked a few state-owned companies to consider share buybacks. Some of the firms include Coal India, NTPC and NMDC. In the Union Budget for the 2020-21 fiscal, Finance Minister Nirmala Sitharaman had set a target of raising Rs 2.1 lakh crore from sale of minority stakes in state-owned companies and privatisations.

Published : January 15, 2021 05:50 PM IST

GAIL board approves Rs 1,046 crore share buyback

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