In a stock exchange filing, EIL said it got the support of 99.9 per cent voting shareholders for the resolution seeking approval for buyback of equity shares at Rs 84 apiece.
Of the 63.19 crore shares, 47.8 crore or 75.6 per cent voted on the resolution. Of these, 47.78 crore or 99.96 per cent voted in favour, the company said.
EIL said it will buy back 6.98 crore or 11.06 per cent of the fully paid-up equity shares at a price of Rs 84 apiece.
The government of India holds a 51.50 per cent stake in the firm that provides engineering consultancy for projects.
The government has asked at least eight state-run companies to consider share buybacks as it scours for ways of raising funds to rein in its fiscal deficit.
The firms asked to consider share buybacks include miner Coal India, power utility NTPC, and minerals producer NMDC.
The government wants public sector undertakings to either meet their targets for capital expenditure or “reward the shareholder in the form of a dividend” or share buyback.
“The buyback will help the company to return surplus cash to its members holding equity shares broadly in proportion to their shareholding, thereby, enhancing the overall return to members,” EIL said.
The offer price of Rs 84 per share is at “a premium of 20.45 per cent on BSE and 19.60 per cent on NSE over the volume-weighted average price of the equity hare for 26 weeks preceding” the November 12 board approval, it said.
“The buyback would help in improving return on equity, by a reduction in the equity base, thereby leading to long term increase in shareholders’ value,” EIL said.
The government intends to participate in the buyback and “tender up to such extent that the minimum shareholding of the promoter post buyback remains at 51 per cent of the post buyback equity share capital of the company,” it said.
EIL said since the buyback is more than 10 per cent of the total paid-up equity share capital and free reserves of the company, an approval of the shareholders by way of a special resolution was sought.
