State-owned Engineers India’s (EIL) Rs 658.80 crore share buyback will open on July 25 and close on August 7.
According to a regulatory notice by lead manager IDBI Capital Markets and Securities, EIL plans to acquire 4.19 crore shares at a price of Rs 157 through the share buyback offer.
EIL shares closed at Rs 164.95 on BSE on Friday.
“The maximum number of equity shares proposed to be bought back represents 6.23 per cent of the total number of equity shares in the issued, subscribed and paid-up equity share capital of the company,” the notice said.
The Board of Directors of EIL had on March 20, 2017, approved share buyback. Shareholders approved the proposal through postal ballot in June.
“The funds for the buyback will be met out of internally generated cash resources of the company,” the notice said.
The government holds 57.02 per cent stake in EIL and has “expressed its intention vide its letter dated March 20, 2017, to participate in the buyback and tender up to 4.19 crore equity shares”.
Share buyback is the acquisition by a company of its own shares. The objective is to return surplus cash to shareholders.
The government has encouraged cash-surplus public sector units (PSUs) to go for share buybacks to meet its disinvestment target. For the current financial year (FY) 2017-18, it has set a target of raising Rs 72,500 crore through minority sales, strategic disinvestments as well as through listing of state-owned insurance companies.
EIL is a Navratna public sector unit under the administrative control of the Ministry of Petroleum and Natural Gas.
It is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas, petrochemicals, fertiliser and LNG industry segments in India and internationally.
The company also operates in other sectors including non-ferrous mining and metallurgy, waste water and infrastructure. It is also a primary provider of engineering consultancy services for the government’s energy security initiative under its Integrated Energy Policy for strategic crude storages.