New Delhi, May 2: Nalco may buy back 25 per cent of its shares from the government - its largest shareholder - to add around Rs 3,000 crore to the exchequer.
The Nalco management was earlier willing to buy back only up to 10 per cent of its shares as the move would drain much needed reserves at a time the aluminium market was not doing well because of dumping by Chinese rivals.
However, the government is keen that companies with ample cash reserves and few options to invest should spend their money to buy back more shares from the government, thus helping the exchequer.
Nalco has reserves of about Rs 11,500 crore, with cash reserves alone accounting for Rs 4,600 crore.
Last month, the state-run company had declared an interim dividend of 25 per cent, amounting to Rs 322.16 crore for 2015-16, on a paid-up equity capital of Rs 1,288.62 crore.
Nalco's shares closed at Rs 46.35, up 1.09 per cent from Friday's close, on the Bombay Stock Exchange today.
Earlier, the government had sought to offload a 10 per cent of its 80.93 per cent stake in Nalco in the open market through a follow-up share sale offer.
However, this move was opposed by both the labour unions and Odisha chief minister Biju Patnaik, who felt this was a prelude to eventual privatisation of the aluminium maker in a manner similar to the sale of Bharat Aluminium to Vedanta during the previous NDA regime.
The finance ministry, in its budget statement presented earlier this year, had said profit making PSUs must pay 30 per cent as dividend every year and in cases where their plans to invest in capital upgrades or expansion are not significant pay even a higher dividend.
Earlier, in a communication sent to all secretaries and PSU chief executives in January, the finance ministry had ordered that all profit-making PSUs pay either 30 per cent of profit or 30 per cent of capital as dividend, whichever was higher.
While that communication acted as an advisory to boards of state-run firms, placing the direction as part of the budget makes it a mandatory dividend rate.