GAIL to buyback 5.7 crore shares, will spend around Rs 1,083 crore

New Delhi: GAIL (India) Ltd on Thursday said it will buyback about 5.7 crore shares for Rs 1,083 crore as it looks to use its healthy balance sheet to reward shareholders for the second time in as many years.

GAIL had in 2020-21 spent Rs 1,046.35 crore on a similar share buyback.

The board of directors of GAIL approved the "buyback of about 5.70 crore shares at the rate of Rs 190 per share aggregating to about Rs 1,083 crores (excluding taxes)," the company said in a statement.

The buyback price of equity shares is at a 24 per cent premium over Wednesday's close price at NSE.

Buying back shares is considered a tax-efficient way of rewarding shareholders. The government owns a 51.80 per cent stake in the company and is likely to participate in the buyback.

In the 2020-21 buyback, the government had received Rs 747 crore.

The share buyback, or share repurchase, is when a company buys back its own shares from investors or stakeholders. It can be seen as an alternative, tax-efficient way to return money to shareholders.

Buybacks are attractive in tax terms even after considering the 10 per cent tax on long-term capital gains (LTCG).

"The Board approved buyback of about 5.70 crore shares through tender offer representing 2.50 per cent of its paid-up capital and free reserves as on March 31, 2021," GAIL said in the statement.

GAIL 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 per cent of the face value).