The decision by government-owned Coal India to pay an interim dividend of 290 per cent will make foreign institutional investors (FIIs) richer by over Rs 1,001 crore.
The total estimated Coal India interim dividend proceeds of Rs 18,317 crore, will come at a time when Centre's plans to sell 5 per cent stake in the PSU were facing strong opposition from trade unions, amid government facing the uphill task of meeting Rs 40,000-crore disinvestment target this year.
Of the total proceeds, Foreign Institutional Investors (FIIs), which as on December 2013 held 5.47 per cent stake or 34.52 crore shares, will get a a hefty Rs 1,001.08 crore.
The government, which holds 90 per cent stake in Coal India Ltd (CIL), will get Rs 16,485.71 crore and use the amount in meeting the fiscal deficit target.
The other major beneficiary of the interim dividend is the Life Insurance Corporation (LIC) which holds 1.83 per cent stake in Coal India. It will get Rs 335.63 crore.
The company, which was sitting on a cash reserve of Rs 62,236 crore as on March 2013, will pay the dividend from January 25. Last year, it had paid Rs 9.7 per share as an interim dividend and paid it from March, 2013.
Coal India shares rose 2.6 per cent on BSE intra-day today amid anticipation of company declaring a grand dividend. Finally, CIL shares closed 0.12 per cent lower.
The dividend announcement came after close of market hours.
The announcement follows a meeting between Finance Minister P Chidambaram and chairmen of top PSUs, including Coal India, ONGC and Indian Oil, last Friday.
Coal India's announcement of interim dividend could be first on the list of blue-chip public sector firms paying special dividends and many more PSUs like ONGC, GAIL, NTPC, SAIL and NMDC may make their respective announcements soon.
Moreover, the government is also working to sell its residual stakes in several private firms, including Hindustan Zinc, Balco and Axis Bank, to meet the disinvestment target.