4 cash-rich PSUs seek shareholders' nod to buy back shares

NTPC, Coal India, SAIL and NMDC have cash reserves of Rs 1 lakh cr

Sitting on cash reserves of over Rs 1 lakh crore, four state-owned firms - NTPC, Coal India, SAIL and NMDC - have sought shareholders' approval for buying back shares, a move that would help the government meet the disinvestment target by selling its stakes in them.

The government, which has set an ambitious disinvestment target of Rs 30,000 crore for 2012-13 and contain the fiscal deficit, has not been able to kick off share sale plan of any of the PSUs due to volatile market conditions.

The four state-owned companies, according to their annual reports and financial results, had cash and cash equivalents of Rs 1,01,027 crore as on March 2012.

Coal India had cash balance of Rs 58,202 crore in 2011-12, while NMDC, NTPC and SAIL had Rs 20,264 crore, Rs 16,146 crore and 6,415 crore respectively as cash and cash equivalents.

In the notices to the shareholders for their annual general meetings (AGMs), all the four firms have put forth resolutions to amend their Article(s) of Association to enable them in buying back their own shares.

"Resolved that pursuant to section 31 and other applicable provisions, if any, of the Companies Act 1956, the Articles of Association of the company be altered to include clause 18A after clause 18 to provide for Buy back of Shares," Coal India has said in its notice for the resolution that is to be placed before the shareholders at the AGM, slated for September 18.

Similar resolutions have been placed in the agenda of AGMs of SAIL, NTPC and NMDC, which will be held between September 18 and September 21.

While SAIL, NTPC and Coal India hold coveted status of Maharatna, NMDC is one notch below with Navratna status.

In March, the Department of Public Enterprises (DPE) had directed all Central PSUs to amend their Articles of Association to provide for buyback of shares, if such provisions did not exist.

The DPE directive had also stated that if a CPSE decides to buyback its own shares from the shareholders using surplus cash, the Disinvestment Department in the Ministry of Finance may offer Government's equity in the firm on behalf of the Government.

Of these four PSUs, SAIL and NMDC are also on the government's disinvestment radar. In July, the Union Cabinet had approved stake sale of 10.82% stake sale in SAIL.

Besides, the government is also exploring options of divesting 10% shares in NMDC and has invited applications to select merchant bankers.