Ending days of speculation, Coal India ltd (CIl) on Tuesday announced an interim dividend of Rs29 per share, which would amount to Rs 18,317 crore for the current fiscal. The decision was taken by CIl board which met in Kolkata and accordingly it was conveyed to the BSE later on.
The move would ensure that Government gets Rs16,485.71 crore for its 90 per cent stake in the Maharatna company, which would be a major boost towards meeting its Rs40,000 crore disinvestment target for 2013-14
“We have approved a dividend of Rs 29 per share of the face value of Rs 10 as recommended by the audit committee of company,” Coal India Chairman S Narsing Rao told reporters after board meeting.
The company will pay the dividend from January 25. With this the logjam related to CIl’s disinvestment too has ended and the Government has managed to garner an amount which is almost close to Rs20,000 crore which it was hoping to pocket by divesting its 10 per cent share in it.
After facing stiff opposition from the Maharatna company’s labour unions (especially the left-aligned faction which also threatened to strike work) over its proposed move for disinvestment, the Government was forced to take the special dividend route and the CIl had indicated last month that it would take a call on it soon.
Significantly though, the decision could be arrived at after last week’s meeting between Finance Minister P Chidambaram and chairmen of top PSUs which also included CIl head S Narsing Rao.
CIl’s shares on Tuesday closed at Rs289.90 a piece on BSE, down 0.12 per cent, though it traded in green for most of the day. The dividend announcement came after the markets closed.
The announcement follows a meeting between Finance Minister P Chidambaram and chairmen of top PSUs, including Coal India, ONGC and Indian Oil, last Friday as the Government is on an overdrive to meet the disinvestment target.
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.
The Government has so far collected about Rs3,000 crore through disinvestment in MMTC, Hindustan Copper, Neyveli lignite and National Fertisers.
The Finance Ministry, seeking to meet its disinvestment target of Rs40,000 crore for current financial year, wanted Coal India ltd (CIl) to dole out a special dividend if the government’s stake sale did not take place.
“If CIl does not go for divestment, then they have to provide us a special dividend,” Economic Affairs Secretary Arvind Mayaram had said.
Asked whether this dividend meant stake sale has been scrapped, Rao said: “Who am I to speak on stake saleIJ”
CIl had originally planned to divest 10 per cent in CIl and lowered it to 5 per cent, or 31.58 crore shares, on account of the stiff opposition.
At the current market price, a 5 per cent Government stake sale in Coal India could fetch about Rs9,150 crore.