The board of the state-owned Oil and Natural Gas Corp (ONGC) has reportedly given the green-light for a Rs 4,022 crore buyback of 25.29 crore shares.
The government, which holds 65.64 per cent stake in the company, will benefit to the tune of about Rs 2,640 crore by offering some of its shares in the buyback programme, according to reports.
The move is part of the government policy of getting cash-rich public sector units (PSU) to liquidate their surplus.
ONGC has said in a regulatory filing that the board of directors approved the buyback of equity shares not exceeding 25.29 crore, being "1.97 per cent of the total paid-up equity shares of the company at the price of Rs 159 per equity share" payable in cash at a maximum cost of Rs 4,022 crore.
According to reports, the government has been pushing rich PSUs to deploy their funds to buy shares back or pay a higher dividend as it is struggling to rein in a runaway budgetary deficit. It is eying the liquidation of some of its shareholdings in cash-rich PSUs and a higher dividend for the shares it holds.
The ONGC, however, will not pay an interim dividend now as its capital expenditure has eaten up all surplus, media reports say, citing sources.
ONGC was trading flat in NSE at Rs148.05 at 12 pm, having opened at Rs149 following the previous close of Rs148.60.
Indian Oil Corp, in which the government directly holds about 56.75 per cent shares, recently announced a buyback of 29.76 crore shares for about Rs 4,435 crore and dividend amounting to Rs 6,556 crore. IOC will buy back 3.06 per cent of its total shares at Rs 149 per share.
The media have been abuzz with the buyback programmes of PSUs that have a cash surplus. The major companies among them are the National Hydroelectric Power Corporation (NHPC), Coal India, Oil India Ltd, Bharat Heavy Electricals Limited (BHEL), National Aluminium Company (NALCO), mining major NLC India Limited, Cochin Shipyard, and KIOCL.
According to reports, the government hopes to net about Rs 5,000 crore from the buyback programmes and dividend announcements.
Oil India has also announced a buyback of 5.04 crore shares for Rs 1,085 crore.