Cash-rich PSUs shower dividends on govt


The cash-strapped government has received a windfall of more than Rs16,000 crore by way of interim dividends from public sector undertakings (PSUs) in the current financial year 2011-12.

The government’s coffers have received a boost worth Rs16,767 crore from interim dividend declared by 17 state-owned companies. This is up 36.8 per cent compared with Rs12,254 crore in the previous financial year. Listed PSUs had paid aggregate dividend of about Rs26,057 crore to the government for the entire financial year 2010-11. India's widening fiscal deficit, on account of a shortfall in disinvestment target and drop in tax collections because of slowdown in economic growth, forced the government to ask profit-making state-owned enterprises to pay additional dividend.

“In FY12, as against a target of Rs40,000 crore, the government raised about Rs14,000 crore from disinvestment, as the domestic investment environment has suffered on multiple counts in the past year,” Finance Minister Pranab Mukherjee had said in his Budget speech.

The major enterprises include, Coal India (Rs 5,400 crore), Oil and Natural Gas Corporation (ONGC) (Rs 4,853 crore) and NTPC (Rs 2,439 crore), which collectively contributed Rs 12,692 crore to the government treasury by way of interim dividend. NMDC, Oil India, Bharat Heavy Electricals Limited, Power Finance Corporation and Steel Authority of India paid more than Rs 400 crore each as interim dividend to the government.

“In the recent past, the major issue that is on the radar of the government is the management of the fiscal deficit. The government has made several attempts, such as PSU disinvestment and PSU buyback programs, to increase revenue collection helping the fiscal deficit management,” said Jagannadham Thunuguntla, head of research at SMC Global Securities.

Coal India has declared a record interim dividend of 95 per cent, or Rs 9.50 per share, of the face value of Rs 10 for the current financial year. The world’s largest coal producer had paid a dividend of Rs 2,217 crore to the government for last fiscal, Rs2,210 crore for 2009-10 and Rs1,705 crore for 2008-09.

ONGC declared a second interim dividend of 30 per cent for financial year 12. Earlier this month, the government had mopped up over Rs12,600 crore from selling a five per cent equity stake in the oil exploration and production company. ONGC had paid a first interim dividend of 125 per cent in January, taking the total interim dividend to 155 per cent or Rs7.75 per equity share of Rs5 each, for FY12.

AK Prabhakar, senior vice-president-equity research, Anand Rathi Financial Services, feels one-time dividend, special dividend or interim dividend are fast and shortcut methods to raise revenue.

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