Gopalan meets heads of PSUs on higher dividend pay

11679 Investors following NALCO. Share this News with them.

0

Like this story, share it with millions of investors on M3

Gopalan meets heads of PSUs on higher dividend pay

With no immediate decision on buybacks, the government is now focusing on alternate options. Chief amongst them may be asking public sector undertakings (PSUs) to cough up more as dividends.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from What's Hot on CNBC-TV18 Watch the full show »

With no immediate decision on buybacks, the government is now focusing on alternate options. Chief amongst them may be asking public sector undertakings (PSUs) to cough up more as dividends. Infact Department Of Economic Affairs Secretary R Gopalan held a meeting with CMDs of key public sector companies to discuss the dividend issue., reports CNBC-TV18's Aakanksha Sethi.

First it was buybacks, then it was proposal to set up a new asset management company in place of SUUTI, over which banks raised questions. They are also looking at secondary market sales and now they are talking about PSU companies to give higher dividends.

Infact secretary R Gopalan held a meeting for almost two hours today with key PSUs such as Coal India , NALCO , SAIL , RINL, Neyveli Lignite and asked them what their expansion plans and cash reserves were. These companies made presentations on how much cash they could spare to give to the government as dividends.

Of the top PSUs, 17 have almost Rs 1 lakh 62 thousand crore in cash and bank balances. Top amongst these is Coal India with cash reserve of Rs 44000 crore followed by ONGC which has cash reserve of Rs 22500 crore, then ofcourse there is NMDC and SAIL.So, the government is keen that this money be used to give dividends.

Sources say that they are looking at a Rs 10-12 dividend from Coal India. Now not all companies agreed, some companies. Remember the guideline is that PSUs have to give dividends of 20% of paid up equity capital or PAT whichever is higher. However, several times PSU see that they have high debt to give to service and hence they cannot give the dividend. So it's not essential for them to give dividends, but this year with the kind of fiscal gap that you are looking at, the government is keen that this be meet.

BL Bagra. CMD, NALCO says, "We have submitted our funding requirement for funding of our growth project, which are in hand and at a designed stage and beyond the designed stage. According to that and then considering the cash balance available with us we feel that in a year or two we are comfortable and we are debt free, so we can perhaps take a call. But we have not fixed up any particular amount or percentage, that we will see what advice comes, but since we are debt free and we have sufficient cash balance, so we can afford a little but more but not too much of it."

However, the dichotomy in this is that just nine days back on the January 3, in the PMO meeting the top 17 PSUs were asked to use their cash reverses for higher capex considering that the economy is likely to go through a slowdown and hence they wanted a pick up in investment. So PSUs will have to answer this question whether to go ahead with higher capex with their cash balances to follow their own growth plans that they have set for themselves or to listen to Finance Ministry advice on giving higher dividends.

Also watch the accompanying video.