Amid the demand for a special dividend if disinvestment in Coal India fails, the state-owned company has scheduled a board meeting next week to consider payment of an interim dividend.
“A meeting of the board of directors will be held on January 14...to consider payment of interim dividend, if any, for the year 2013-14,” Coal India said in a filing to the BSE.
The Finance Ministry, seeking to meet its disinvestment target of Rs. 40,000 crore for current financial year, wants CIL to dole out a special dividend if the government’s stake sale does not take place.
“If CIL does not go for divestment, then they have to provide us a special dividend,” Economic Affairs Secretary Arvind Mayaram told PTI in an interview.
The stake sale could fetch over Rs. 9,000 crore to the exchequer at the current market price.
In 2012-13, CIL had paid a total dividend of Rs. 8,842.91 crore to the government, the highest ever in the history of the company.
The CIL disinvestment has been hanging fire because of opposition from the trade unions. The government holds a 90 per cent stake in the mining company.
It 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.
Coal India shares jumped 5.22 per cent to Rs. 290 on the BSE following the announcement by the company. The record date for dividend payment has been fixed at January 20.
At the current market price, a 5 per cent government stake sale in Coal India could fetch about Rs. 9,158 crore.
The government is also trying to seek higher dividend from other PSUs, which are sitting on huge cash piles. At the end of the 2012-13 financial year, CIL’s cash and bank balance stood at Rs. 43,776 crore.
The Finance Ministry has laid out a road map for disinvestment in the remaining days of this financial year. It includes stake sales in PSUs such as Indian Oil, Engineers India, BHEL and Hindustan Aeronautics.
Although the government had budgeted raising Rs. 40,000 crore from public sector undertaking disinvestment, it has so far garnered only Rs. 3,000 crore from stake sales in seven PSUs, including Power Grid Corporation of India, Hindustan Copper, National Fertilisers and MMTC.
Receipts from dividend and disinvestment are essential for the government to rein in the fiscal deficit at the targeted level of 4.8 per cent of GDP this financial year.