Coal India on Tuesday pleasantly surprised investors by announcing an interim dividend of Rs 29 per share on every share having face value of Rs 10, amounting to Rs 18,317 crore, for 2013-14, giving an immediate dividend yield of 10% on Tuesday's close of Rs 290.
The announcement after market hours came at the higher end of the range of Rs 15,000 crore to Rs 20,000 crore that was anticipated by the market and reported by dna earlier.
While it comes as a positive for investors, it is the government which would laugh all the way to the bank, pocketing a cool 90% of the payout.
"The government would get Rs 16,485.71 crore for its 90% stake. In addition, it would also receive Rs 3,113.05 crore as dividend distribution tax. So, in total, the government will get 19,598.76 crore," Coal India chairman S Narsing Rao said after the board meeting.
Coal India in 2012-13 paid out Rs 8,843 crores as dividend consisting of a final dividend of Rs 4.30 a share plus interim pay of Rs 9.70 a share.
This fiscal so far, the government has been able to raise just Rs 2,900 crore through sale of its stakes in state-backed firms. It is likely to raise no more than Rs 15,000 crore by fiscal-end, much less than the disinvestment target of Rs 40,000 crore. So much so that in November, finance minister P Chidambaram asked public sector companies such as Bharat Heavy Electricals, Hindustan Zinc and Coal India to come back with alternative options to meet the target somehow.
He followed it up with a meeting with heads of cash-rich public sector undertakings or PSUs, including oil marketing companies or OMCs last Friday.
And Coal India figured prominently in that meeting with a reserve of Rs 64,270 crore, next only to Reliance Industries, which tops the national list in terms of cash balances. Other large PSUs like ONGC, GAIL, NTPC, SAIL and NMDC are now expected to announce similar dividend payouts. The dividend news comes on the back of another positive for investors – on Monday, reports said the Competition Appellate Tribunal has stayed the fine of Rs 1,773 crore imposed on Coal India by the CCI till further orders.