Meet capex targets or pay higher dividends, PSUs told

The revenue constraints coming in the way of achieving this year’s fiscal deficit target may force public sector undertakings to pay more dividend. Finance Minister P Chidambaram on Friday told heads of large state-owned companies that he will not accept dividend less than what was paid during the previous financial year.

Chidambaram met top officials of 23 public sector units to review their capital expenditure (capex) plans for the current financial year ending March 2014.

"Dividend payments by PSUs will not be less than last year's. In no case will we accept dividend less than last year's," he told reporters after meeting heads of blue-chip PSUs such as Oil & Natural Gas Corp, Indian Oil, GAIL India, Steel Authority of India, NTPC and Coal India.

The government received Rs 55,443 crore as dividend and profit in the last fiscal. The target for the current financial year is Rs 73,866 crore.

The finance ministry has been urging state-owned companies to spend capital in order to give a boost to the economy.

Companies that have exceeded their capex targets include NMDC, Bharat Electronics, Hindustan Aeronautics, Oil and Natural Gas Corp, Power Grid Corporation of India, Rastriya Ispat Nigam and Satluj Jal Vidyut Nigam.

Bharat Dynamics is unlikely to meet its capital expenditure target, a finance ministry official said.

“Most of them will achieve their capex, some may not. We have put them a notice, we will revisit those cases in January 2014 after looking at the third quarter capex. Except half a dozen, all of them are going to meet their capex,” Chidambaram said.

“In total in H1 (April-September) if you see all the 23 companies put together, actual capex utilisation is 96.2 per cent...hoping to meet our budgetary dividend target,” the official said.

According to the official, the minister has advised companies to give higher dividend payout to the government, if they were not be able to spend their cash.