IOC to buy back shares for Rs 44 bn as govt looks to meet budget deficit

State-owned Indian Oil Corp (IOC) will buy back 297.6 billion shares for about Rs 44.35 billion and spend another Rs 65.56 billion on paying an interim dividend to shareholders as the government taps cash-rich PSUs to meet its budget deficit.

The board of country's largest oil firm Thursday approved buyback of up to 297.6 billion equity shares, or 3.06 per cent, at Rs 149 per share, IOC said in a regulatory filing.

The buyback price is 8.6 per cent premium to Thursday's closing price of IOC stocks on the BSE. IOC closed 0.5 per cent higher at Rs 137.20 on the exchange.

The government, which holds a 54.06 per cent stake in the company, is expected to participate in the share buyback.

The government is targeting a minimum Rs 50 billion through share buyback offers of state-owned firms like Coal India, BHEL and Oil India Ltd.

Besides IOC, at least half a dozen other central PSUs have disclosed share buyback programmes. Prominent among these include NHPC, BHEL, NALCO, NLC, Cochin Shipyard and KIOCL that could fetch the government a little over Rs 30 billion.

The government is expected to participate in each of the share buyback programme of these PSUs.

IOC said its board has also declared an interim dividend of 67.5 per cent or Rs 6.75 per share for fiscal 2018-19.

The total dividend payout, excluding tax would be Rs 65.56 billion, of which the government will get Rs 35.44 billion plus the dividend distribution tax.

"The public announcement setting out the process, timelines and other requisite details will be released in due course in accordance with the Buyback Regulations," IOC said.

For interim dividend, IOC said the record date would be December 25 and the money will be credited to the account of the shareholders on or before December 31.

Last month, Oil India Ltd announced a buyback of 5.04 crore of its share for a little over Rs 10.85 billion.

The Department of Investment and Public Asset Management (DIPAM), which has been set a target to raise Rs 800 billion for the government through stake sale in central public sector enterprises, had prodded all cash-rich PSUs to go for share buybacks.

PSUs having a net worth of at least Rs 20 billion and a cash balance of more than Rs 10 billion have to mandatorily go in for share buyback.

Of the Rs 800 billion disinvestment target, the government has so far raised just over Rs 150 billion through minority stake sale in PSUs.