In the meeting conducted yesterday (07 Jun’16) NMDC’s Board of Directors approved buyback of equity shares. SteelMint had reported that NMDC has plans to consider buy back of equity shares on 07 Jun’16.
Later yesterday, the company informed via corporate announcement that approved by majority vote the proposal to buy back by the company of its fully paid-up equity shares of INR 1 each not exceeding 80,08,25,526 equity shares (representing 20.20% of the total number of equity shares in the paid-up share capital of the company and is not exceeding 25% of the total number of equity shares in the paid-up share capital of the company i.e. 99,11,79,000 equity shares) at a price of INR 94 per equity share (the “Buy back offer price”) of face value of INR 1 each payable in cash for an aggregate consideration not exceeding INR 7527,75,99,499 crores (the “Buy back offer size“) which is not exceeding 25% of the aggregate of the fully paid-up share capital and free reserves as per the audited accounts of the company for the financial year ended 31 Mar’16 from the equity shareholders of the company, as on the record date, on a proportionate basis, through the tender offer route as prescribed under the buyback regulations.
The Board of Directors has constituted a buy back committee and delegated its powers to the buy back committee to do all such acts, deeds, matters and things as it may in its absolute discretion, deem necessary expedient usual or proper in connection with the buyback.
NMDC is primarily engaged in the iron ore mining business but it is also expanding towards steel production. Thus buy back of shares will further help the miner to use the idle money in utilizing resources in a more efficient manner.
Earlier in May’16, government announced that the public sector companies should make use of their cash balances more efficiently and increase resources.
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