Coal India’s fourth largest mining subsidiary, Western Coalfields Ltd (WCL) is likely to abstain from partially extinguishing its own shares in the ongoing buyback process and thereby will not transfer any of its free reserves to its mother company.
A senior WCL official told Business Standard that it has already sought an exemption from Coal India, which holds 100 per cent stakes in WCL, and is yet to hear back from the company. “As we have expansion plans which entail investments more than our reserves, we have sought an exemption from Coal India in the ongoing share buyback process,” the official, who did not wish to be named, told this newspaper.
Although the ongoing buyback process is in adherence to the DIPAM (Department of Investment And Public Asset Management) guidelines, which has made it compulsory for any profitable public sector enterprise with a net worth exceeding Rs 2,000 crore and a bank balance of Rs 1,000 crore to buy back a maximum 25 per cent of its equity shares, the 2016 guidelines has also provisioned a public sector undertaking to seek exemption from DIPAM. WCL’s net value, as on March 31, 2016 stood at Rs 3,157.20 crore with a surplus reserve of Rs 2,860.10 crore which brings the company under DIPAM’s fold.