Govt prepares list of cash-rich PSUs for share buyback

The government has been thinking of raising funds through the buyback route as it has not been able to raise money through sale of equity in public sector units on account of uncertainty in the stock markets.

"The government is open to raise funds through the buyback route as part of the disinvestment exercise. We are thinking of innovative ways to meet the target," a Disinvestment Ministry official told PTI.

Under the buyback mode, the government can raise money by selling its equity in the company to the concerned PSU itself.

The official said about two dozen PSUs having large surplus cash balance SAIL, NMDC, ONGC, NTPC, Coal India, Oil India and MMTC.

Such companies may be asked to buy back about 5 per cent equity from the shareholders. Under the current regulations, market regulator Sebi allows companies to buy back their own equity from shareholders.

The official said the government is yet to decide on whether to adopt the auction route for stake sale in PSUs.

With only Rs 1,145 crore in its kitty so far from disinvestment, there are apprehensions whether the mammoth target of Rs 40,000 crore for this fiscal would be met.

Volatile stock market conditions has forced government to delay stake sale in PSUs. Global equity markets have been on a downside on fears of a slow recovery in the Eurozone economies as well as the debt crisis in US.

In view of uncertain market conditions, companies like SAIL and Hindustan Copper (HCL) have deferred fresh equity issue, though the government may still go ahead with its proposal to offload stake.

Last fiscal, the government raised Rs 22,763 crore through sale of equity in public sector enterprises.

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