The government’s calculations have gone awry due to the failed attempt at an offer for sale last year

Coal India Ltd. (CIL) may place a proposal for a record high interim dividend of around Rs.15,000 crore compared to Rs.6,000 crore interim in the previous fiscal, before its board members at its meeting next week. It had paid Rs.8,842 crore dividend for the full year in fiscal 2013.

The issue of considering an interim dividend and placing it before the board has been advanced in view of the government’s move to tap the cash-rich public sector units pay higher dividends to help improve its fiscal management. It had targeted to raise Rs.40,000 crore through disinvestment of its stake in a few CPSU, including CIL. It has been able to raise very little even as several sale offers were shelved in view of tough ground realities like the impending elections and the uncertain stock market.

Sources said that although normally the interim dividend was finalised along with the third quarter results in February, this time matters have had to be hastened as the government was in a hurry to raise funds. CIL had declared its 2012-13 interim in March.

In the case of CIL, the government’s calculations have gone awry due to the failed attempt at an offer for sale (OFS) last year which was reportedly spiked, with the elections approaching.

The 10 per cent OFS was pared to 5 per cent, but even that was put on the backburner in December 2013. This was expected to raise about Rs.9,000 crore.

The government holds 90 per cent in the coal major.

The record interim, if it materialises, will come in a year when CIL’s bottomline is under pressure. Although topline is likely to grow by around 4 per cent in 2013-14, bottomline may stay at last year’s levels.

CIL’s profits during the first-half were lower by Rs.762 crore at Rs.6,783 crore in the April-September 2013 period.

Sources said that its cost of production was facing inflationary pressure. Hike in diesel prices have pushed up costs by Rs.2,000 crore while DA neutralisation for its 3.6 lakh-odd employees have resulted in an additional outgo of Rs.500 crore.

The dividend would be paid from accumulated profits, it was learnt.

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