In what would give a major boost to the Centre's receipts this fiscal, Coal India (CIL) on Tuesday announced an interim dividend of Rs 18,300 crore, which includes Rs 16,485 crore to the government. Besides this highest-ever amount as dividend, the government will also get a little over Rs 3,100 crore as dividend distribution tax from CIL.
The dividend will partly compensate the government which has been unable to sell shares in the miner. The 5% stake sale, which would have fetched the exchequer about Rs 9,000 crore at current prices, is hanging fire due to stubborn opposition from trade unions. However, the heavy payout could hit the capex plans of the coal major, obligated to supply specified quantities of coal to power companies under the 157 fuel supply agreements (FSAs) enforced by the government.
Anxious to prevent revenues falling far below budget estimates, the government has also firmed up alternative plans for other major PSU stake sales – 10% in Indian Oil Corporation, for instance, will now be sold exclusively to ONGC and Oil India. It is also eyeing a mop-up of R3,000 crore from an exchange traded fund (ETF). The residual stake sales in Hindustan Zinc and Balco – both promoted by Vedanta Resources – are also on cards, besides the sale of a 12-13% stake in Axis Bank held through SUUTI.
“We have approved a dividend of R29 per share as recommended by the company's audit committee,” Coal India chairman S Narsing Rao told reporters after a board meeting in Kolkata. The government holds 90% in CIL.
CIL’s special dividend, the highest announced so far, has been 290% of its face value, far exceeding 97% of face value it paid last fiscal.
In FY13, CIL paid a total dividend of Rs 8,842.91 crore and dividend distribution tax of nearly Rs 1,300 crore. IN FY12, it paid a total dividend of Rs 6,316.36 crore. The larger dividend payout for FY14, incidentally, comes amid fears that CIL’s profitability may fall because of lower-than targeted production and offtake.
The dividend will be disbursed on January 25 and all shareholders as on January 20 will be eligible for it. Coal India shares closed at Rs 289.90 on BSE, down 0.35%.
CIL, which had signed 157 FSAs to feed power capacity of over 71,000 MW, needs to ramp up production, if it is to be able to produce enough coal for this level of