Gail India and EIL likely to issue bonus shares worth Rs 3,000 crore

State-owned GAIL and Engineers India Ltd [EIL] would issue bonus shares to the government worth Rs 2,940 crore in the current fiscal year as per the budget statement. According to the revised budgetary estimates, GAIL will issue bonus shares worth Rs 2,840 crore while EIL will issue worth Rs 99 crore. The bonus issue statement has not been received by stock exchange filings.

The government has a 51.9% share in GAIL and 51.3% in EIL. The shares of GAIL, valued at Rs 114,000 crore are increased 80% in a year. Engineers India, the engineering consultancy has a net worth of Rs 13,300 crore.

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The advantage of bonus shares increase the shareholder’s total investment in the company. The receipt of bonus shares is a tax-free investment. The shareholder receives higher dividends if the company declares dividends at a later date. Companies issue bonus shares to encourage retail participation and increase their equity base.

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