CIL declares dividend of 290%, Centre to get Rs 16,485 cr

State-owned Coal India Ltd today declared an interim dividend of Rs 29 per share amounting to Rs 18,317 crore, or a record 290 per cent, for 2013-14, helping the Centre garner about Rs 16,485 crore.

The central government, which faces the uphill task of meeting Rs 40,000-crore disinvestment target this year, will get Rs 16,485.71 crore for its 90 per cent stake in the Maharatna company.

After including the dividend distribution tax of Rs 3,113 crore, the bonanza for the government is Rs 19,598.76 crore.

The announcement, which market observers termed as a special dividend to the government, comes at a time when the Centre's plans to sell 5 per cent stake in the company are facing strong opposition from trade unions.

"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 here after board meeting.

Coal India Ltd (CIL), which is sitting on a cash reserve of Rs 62,236 crore as on March, 2013 will pay the dividend from January 25. Last year, it had paid Rs 9.7 per share as an interim dividend and paid it from March, 2013.

Coal India shares rose 2.6 per cent on BSE intra-day today amid anticipation of company declaring a grand dividend, but shares closed lower by 0.12 per cent. The dividend announcement came after close of market hours.

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 Rs 3,000 crore through disinvestment in MMTC, Hindustan Copper, Neyveli Lignite and National Fertisers.

The Finance Ministry, seeking to meet its disinvestment target of Rs 40,000 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 sale?"

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 Rs 9,150 crore.