Government seeks higher dividend, PSUs non-committal
Many heads of the large public sector undertakings (PSUs) are believed to have told government that they would prefer to maintain dividends at the previous year's level, though some expressed their ability to shell out higher interim dividends.
Pressed hard for funds, the Finance Ministry held a meeting of cash-rich PSUs to seek higher dividends but failed to obtain firm commitments from state-owned blue-chip companies.
Many heads of the large public sector undertakings (PSUs) are believed to have told government that they would prefer to maintain dividends at the previous year's level, though some expressed their ability to shell out higher interim dividends.
Chaired by Department of Economic Affairs Secretary R Gopalan, the meeting was attended by representatives of over half-a-dozen PSUs, including SAIL, NMDC, MOIL, HAL Coal India and Nalco.
"The government wanted better dividends than previous year's, but we have investment plans lined up for the next 3-4 years. We have said that we will abide by the standard rule of 20 per cent of the paid-up capital," Nalco Chairman and Managing Director B L Bagra said after the meeting.
As regards the interim dividend, he said, Nalco board would take a final call on giving the interim dividend. "We told the government that though we have Rs 4,500 crore cash balance, we are not in a position to spare," he added.
Manganese major MOIL CMD K J Singh said, "We will pay a dividend of 20 per cent of the profit after tax as per the DPE guideline. The interim dividend can be 45 per cent of the total dividend."
According to a SAIL official, the steel major will take a decision on interim dividend at its board meeting towards the end of this month.
The government is seeking higher dividends from the PSUs to tide of the financial problem which was aggravated by rising subsidy bill and slow progress on disinvestment front.
While the subsidy bill during the current fiscal is expected to shoot up by an additional Rs 1 lakh crore, the government is unlikely to meet the disinvestment target of Rs 40,000 crore.
The government has already announced borrowing an additional Rs 90,000 crore to bridge the revenue-expenditure gap.
There are apprehensions that the Centre's fiscal deficit, the gap between overall revenue and expenditure, is likely to exceed the budget estimate of 4.6 per cent of GDP in the fiscal.
Under the existing norms, the profit-making PSUs are required to declare a dividend of at least 20 per cent of government's equity investment or 20 per cent of post-tax profit, whichever is higher.
In the case of oil, petroleum, chemicals and other infrastructure industries, the pay-out has to be at least 30 per cent of post-tax profits.