Buyback of GAIL share raises Rs 747 Crore for government

The Indian government gained Rs 747 Crore out of the total of Rs 1046 Crore buyback of the shares.

Gas Authority of India (GAIL) is a state- government-owned entity and administered under the Ministry of Petroleum and Natural Gas.

The government holds 51.45 percent ownership in the company.

The buyback of shares refers to the buying of shares by the company itself in the stock market. It is a case when the company wants to reduce the outstanding shares in the market. Thus, increases their ownership in the company.

Additionally, any company may buy back the shares when offered at an extremely discounted rate.

The share offer price was Rs 150 per equity share up to Rs 1,046.35 Crore. The offer closed on March 10, 2021.

The prominent reasons for the buyback aim to improve the return on equity. The company focuses to enhance its capital structure. Besides, increase shareholder’s value in the long-run.

The buyback does not include any change in the management of the company.

The buyback may result in a reduction of the in-hand investment amount of the company. Still, it will not affect in any manner the earnings or profitability of the company.

The company did want wanted to use borrowed funds for the buyback. Hence, they used an internally generated fund of the company.

Additionally, the buyback does not intend to after the earning of the company. Despite the fact, that it may incur the cost of financing the buyback.


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