Nov. 28 (Bloomberg) -- The views of Coal India Ltd. are being sought on a plan to buy back shares held by the Indian government, which is seeking funds to reduce its budget deficit, a coal ministry official said.
“I have to know from Coal India what a share buyback means to them,” Coal Secretary Alok Perti said in New Delhi today. “We cannot thrust anything on the company.”
Coal India received a cabinet note on the matter, Bloomberg UTV said, citing a report by Newswire 18 that quoted Perti.
India may allow state-owned companies, including Coal India, to buy back shares held by the government to narrow a budget gap as an alternative to dwindling proceeds from public offerings, Disinvestment Secretary Mohammad Haleem Khan said Oct. 13. The South Asian nation has raised 11.4 billion rupees ($220 million) since April, or about 3 percent of the target, as falling stock markets erode demand for shares.
Coal India, the world’s biggest producer of the commodity, climbed 4.5 percent to 322.50 rupees at the close in Mumbai, the most since July 27. The stock has risen 2.5 percent this year, compared with a 21 percent drop in the benchmark Sensitive Index.
Finance Minister Pranab Mukherjee said last month it would be a “challenge” to narrow the government’s budget deficit to a four-year low of 4.6 percent of gross domestic product by the end of March.
“The ministry has asked us about our cash position and we have told them that we only have 150 billion rupees of cash to spare,” Coal India chairman Nirmal Chandra Jha said today. “We expect to have cash reserves of 600 billion rupees by the end of this fiscal.”
The coal miner, in which the government holds a 90 percent stake, and its units had cash and equivalent of 549.8 billion rupees as of Sept. 30, according to data compiled by Bloomberg.
The government sold Coal India shares in October 2010 in the nation’s largest IPO. The sale was 15 times oversubscribed and raised 152 billion rupees, helping the government meet part of its asset-sale target for that year.
Oil & Natural Gas Corp., India’s biggest exploration company, withdrew its share-sale document Nov. 22 after an oil ministry official said the proposed offering may not take place in the year ending March 31. India planned to sell stakes in companies including ONGC, Bharat Heavy Electricals Ltd. and National Building Construction Corp.
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