India asks eight state firms to consider share buybacks this year to rein in fiscal deficit

Photo: Srikanth D

India has asked at least eight state-run companies to consider share buybacks in the fiscal year that runs through March 2021, two government officials said, as New Delhi scours for ways of raising funds to rein in its fiscal deficit.

The firms asked include miner Coal India, power utility NTPC, minerals producer NMDC and Engineers India Ltd, said one of the sources, who sought anonymity as the discussions are private. “Buyback is an important tool in our strategy and it helps in building market price,” added the second official, who also spoke on condition of anonymity.

India is unlikely to be anywhere near its fiscal deficit target of 3.5% of GDP for 2020-21 as coronavirus curbs hit tax collections and delayed efforts to privatise energy firm Bharat Petroleum Corp and flag carrier Air India.

In February, the government had set itself a target of raising more than $27 billion from privatisations and sale of minority stakes in state-owned companies this fiscal year.

However, some companies, particularly in the oil sector, may not be able to do buybacks, the sources warned, as the government’s stake is just sufficient to ensure its position as a majority holder.

“The government stake in these companies is about 51% and there is a competing claim on their cash in the form of huge capex commitment and dividend payments,” the second source said.

But for those with sufficient funds and capital expenditure below target for this fiscal year, the government could seek approval from the cabinet to prune its stake to less than 51% in individual firms without giving up control, the official said.

India had tasked 23 state-run companies with capital expenditure of 1.65 trillion rupees ($22.5 billion) this fiscal year, but some firms face spending challenges as the world’s second most populous nation adds virus infections.

The government had asked state-run firms to either meet their targets for capital expenditure or “reward the shareholder in the form of a dividend,” the officials added.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.