NEW DELHI: State-run gas utility GAIL Ltd on Thursday announced a Rs 1,083 crore share buyback plan for 5.7 crore scrips at Rs 190 each, marking a premium of roughly 24% on Wednesday closing price on the NSE.
This is the second buyback in as many years and will benefit the government as it holds 51.8% in India’s largest gas company. The government had in 2020-21 gained Rs 747 crore in a Rs 1,046 crore buyback announced by GAIL.
The total number of shares represents 2.5% of the company’s paid-up capital and free reserves as on March 31, 2021, GAIL said in the statement.
A buoyant bottom line is the driving force behind the share buyback, considered a tax-efficient way of rewarding shareholders. Buybacks are attractive in tax terms even after considering the 10% tax on long-term capital gains.
India’s largest gas company has been consistently rewarding its shareholders through regular dividends, issue of bonus shares and also buyback of shares at a premium.
During the current financial year (2021-22), the company paid the highest-ever interim dividend of Rs 3,996 crore at the rate of 90% of the face value.
The company issued bonus shares in 2008-09, 2016-17, 2017-18 and 2019-20. In March 2021, it completed buyback of about 6.9 crore shares at Rs 150 each.
GAIL owns and operates around 13,840 km, or 74% of the total length of the cross-country natural gas pipeline network in the country. It sells around 52% of all natural gas sold in India and 44% of gas imported in ships. It supplies 67% of gas consumed by the fertiliser industry, 53% by power and 60% by the city gas sector.
The company has also forayed into alternate energy such as green hydrogen, renewables and bio-fuels projects.
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