MUMBAI: The Board of Cochin Shipyard, India’s largest shipbuilding facility, on Tuesday approved the proposal to buyback equity shares of the company at Rs 455 per share for an amount of Rs 200 crore, becoming the third company to announce a buyback in quick succession.
The public sector undertaking’s shares closed marginally down at Rs 400.05 on BSE.After the volatile stock markets made disinvestment through public issues difficult, the Government of India (GoI) had planned to raise money through the buyback mechanism.
Last week, National Aluminium Company (NALCO) had announced share buyback at Rs 75 a share amounting to Rs 504.83 crore and before that, NLC India decided to buyback shares at Rs 88 a share amounting to Rs 1,248 crore. NLC’s current market price is at Rs 85 and NALCO’s at Rs 67.
The government had set a disinvestment target of Rs 80,000 crore for the current financial year, up from Rs 72,500 crore last year. So far, the disinvestments attempted and buybacks announced are all for smaller sums that won’t take the proceeds anywhere close to the target.
“The government, instead of taking large dividends from these companies, is trying to make them buy back the GoI holding with their surplus cash. In a falling market, they can be a good deal for other shareholders as well,” an analyst said.
Oil and Natural Gas Corporation (ONGC), which made up for much of the disinvestment proceeds last year through its purchase of refiner Hindustan Petroleum Corporation Ltd, is once again eyed for a buyback scheme this year.
However, having spent much of its reserves on HPCL buyout and having borrowed for the same, ONGC has been saying it may not have enough cash to carry out a buyback this fiscal.