KOLKATA | Jun 05, 2016: Mining behemoth Coal India is likely to deliberate on a proposal to buy back its shares in its next board meeting.

"Coal India had a meeting with the government last week and a buyback proposal is likely to be placed before the next board meeting," company officials told PTI.

However, the date of the next board meeting as well as the quantum of the buyback plan are yet to be finalised.

Finance Ministry is pushing for buyback of shares by CPSEs. This is being done for two purposes -- to generate cash for the government and help push up the valuation for any divestment.

Sources said the buyback size could be at least 5 per cent of the paid-up capital.

In the last one year, Coal India has seen depletion in its cash reserve by 18 per cent, or Rs 8,700 crore, to Rs 38,300 crore as on March 2016.

The government has set a disinvestment target of Rs 56,500 crore for 2016-17. Of this, Rs 36,000 crore is expected to come from minority stake sales.

Coal India board will deliberate on cash outgo due to the buyback and its long-term investment plan to meet the Coal Ministry's goal of one billion tonne output by 2020.

The Centre also needs to bring down its stake in Coal India below 75 per cent to adhere to market regulator Sebi's norms. The deadline for ensuring this is August 2017.

(Source: http://economictimes.indiatimes.com/)