Government Intends To Garner Rs 21000 Crore Via Special Dividends From Big PSUs

Forget disinvestment of PSUs. The government is all set to accumulate a bounty via special dividends from cash rich PSUs. First in line is the biggest coal miner of the world Coal India which is all set to shell out around Rs 15000 to its share holders, 90% of which is held by the government of India. 

The Finance Ministry is also in talks with other cash rich PSUs like ONGC, OIL India, NMDC, GAIL, etc., for raising funds to somehow plug the fiscal deficit gap. A CMD of one Maharatana oil and gas company told DSIJ that rounds of deliberation are going on with the Finance Ministry officials, and, they are quite adamant that PSUs pay these special dividends. The Government wants to accumulate around Rs 21000 crore in the form of dividends from ONGC, NMDC, OIL and CIL.

The Finance Ministry wants every company holding cash to give out a dividend higher than what it had paid last year. “In sync with that ONGC, Oil India and GAIL have been instructed to announce dividends more than FY13 levels. Last year ONGC paid an overall dividend of 190% and this year, as instructed by the Finance Ministry, it may announce a 210% dividend,” adds the CMD of the company. 

In that case the government will receive around Rs 3200 crore through this special dividend. It has already paid a 100% interim earlier. As far as Oil India is concerned, last year it had announced a total dividend of 300% and the Finance Ministry wants that the company maintain that level. That would fetch Rs 30 /share in dividend and the government is all set to garner around Rs 775 crore in the current fiscal. 

The Gail management has made it clear to the government that it is going through a bad phase and it won’t be possible for the company to give any special dividends. “We have made it clear to the ministry that if we are forced to give special dividends then we can only do it through borrowings,” informed a top Gail official. Last year, Gail has given a 96% dividend to its shareholders.

Another company that is on the government’s radar is the cash rich miner, NMDC, which had announced and paid a 700% (Rs 7/share) dividend last year. It has already announced a 300% interim dividend during the current fiscal. Last year the government had received around Rs 2200 crore as dividend from NMDC and this year it is pushing for doubling the payout ratio. If sources are to be believed, NMDC has agreed to pay around Rs 2500-3000 crore to its shareholders, out of which the government will receive Rs 2000-2500 crore as special dividends. 

The Finance Ministry is quite bullish on the dividend payout by Coal India. Last year, the company had paid Rs 9825 crore in dividend (@Rs14/ share) to its shareholders, out of which around Rs 8800 went to the government. This year the Finance Ministry is persuading CIL to pay at least Rs 25/share as special dividend. In that case, the government will get more than Rs 15000 crore as dividend from this company alone. Its board will decide about this today and this expectation has seen the scrip rise by as much as 3% in morning trades. 

As far as the cash situation of companies is concerned, CIL has around Rs 44000 crore as cash and bank balances while the cash balance of ONGC, OIL, NMDC and NTPC stand at around Rs 19000 crore, 12000 crore, Rs 21000 crore and Rs 18000 crore respectively as on March 31 2013.