NEW DELHI/BHUBANESWAR, India Coal India Ltd(COAL.NS) is likely to buy back shares worth at least 25 billion rupees ($368 million) from the government, a source familiar with the matter said, as the finance ministry looks to state firms for cash ahead of the union budget.
The government has also written to aluminium maker NALCO (NALU.NS), asking it to buy back 25 percent of its shares from the government worth 32.5 billion rupees ($478 million).
NALCO Chairman Tapan Kumar Chand told Reuters on Tuesday the company would likely appoint state-controlled SBI (SBI.NS) to advise it before a board meeting on Feb. 11 to consider the government's request.
Coal Secretary Anil Swarup declined to comment on the Coal India buyback and so did Finance Ministry spokesman D.S. Malik. But the source cited above said a decision would be taken by the company's board in a few days.
A Coal India spokesman could not be immediately reached for comment.
The buybacks will help the government partly make up for a funds shortfall in its ambitious divestment target for state companies ahead of the federal budget later this month.
India's cabinet last year planned a slew of divestments in state-owned companies, including sales of 10 percent each in Coal India and NALCO. But the programme failed to get traction as a commodities downturn cut investor appetite.
The government currently owns 79.65 percent in Coal India, which has a market value of more than $30 billion, according to Thomson Reuters data. The request for buybacks would amount to a stake of more than 1 percent at current prices.
Coal India had more than $9 billion in cash and short-term investments as of the September quarter, according to Thomson Reuters data.
Still, a buyback would put pressure on the world's largest coal miner, which is fast burning through its cash horde as it expands aggressively to meet the government-set target of doubling output this decade.
($1 = 67.9750 Indian rupees)
(Reporting by Krishna N. Das and Jatindra Dash; Additional reporting by Rajesh Kumar Singh in NEW DELHI; Editing by Paritosh Bansal and Muralikumar Anantharaman)
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First Published On : Feb 2, 2016 17:02 IST