Energy sucked out of Coal India, Now over to ONGC-OIL

At last what was expected happened exactly in the same fashion. Coal India stock tanked almost 10% on Friday, the day on which it became ex-dividend. CIL board announced a special dividend of Rs. 29 on January 15 that amounts to an outgo of Rs. 18377 crore to shareholders and majority of it, around Rs. 16500 crore would go to government. CIL stock opened at Rs.275 on BSE, down almost Rs. 27 from the previous close of Rs. 302 and dived further to Rs. 273.20, losing almost 10% as it is trading on ex dividend basis.

This has clearly raised serious doubts on the process in which special dividend has been taken by the government to fill its coffers, while company and its shareholders has been stranded at the bourses. Experts feel that this is not at all a good sign for the PSUs stock as government is pushing these big companies to accomplish its own objective and bluntly arm twisting the management for that. Just to any how boost the targeted revenue from PSUs (as disinvestment target is Rs. 40000 crore) now government has put focus on NMDC for special dividend of Rs. 2500 crore, apart from ONGC and OIL, which as a consortium is going to purchase IOC’s 10% stake at Rs. 4800 crore via block deal. They will also give yearly dividend to the government for the current year to the tune of Rs. 3775 crore (around Rs.3000 crore from ONGC and Rs.775 crore from OIL India).

Considering this it is almost certain that finances of these big PSUs will be strained and their capex plans may be hit due to this financial exodus. “It is a serious concern for the company as there would be an extra burden of around Rs.2400 crore, owing to IOC stake buyout, it may hamper our capex plans for current year, which is budgeted at Rs. 35000 crore for current fiscal,” a top ONGC official told DSIJ. Market participants also predicting same kind of market reaction for ONGC, OIL and NMDC stock on the day when money will be sucked out of these company for IOC stake purchase and special dividends respectively.

On the other hand with these receipts coming its way, government will now gross Rs. 29000 crore (Rs. 2500 crore from NMDC, Rs. 530 crore from EIL and 2050 crore via buyback of NHPC stock) in the form of disinvestment proceeds, buyback and special dividends during current fiscal, which may somehow serve its purpose to accumulate finances for plugging deficit financing gap, targeted at 4.8% of GDP. But is anybody is thinking about its impact on PSU companies?