Top PSUs resist govt plea for big dividend

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BHEL, CIL may fall in line, others not in favour

Top PSUs resist govt plea for big dividend
The government is facing resistance from some of the top 20 public sector companies asked to part with more cash as special dividends. The government can receive as much as Rs 20,000 crore more as by arm-twisting them to pay special dividends after meeting their capex plans.

It will help finance minister P Chidambaram to pare the fiscal deficit by 0.2 per cent. He is promise-bound to keep the deficit within 4.8 per cent of GDP. Many independent agencies, however, think it will be as high as 5.2 per cent.

BHEL and Coal India may fall in line with the government demand but others are not in favour of paying a special dividend. The chiefs of at least four PSUs are believed to have asked the government to refrain from draining out their cash reserves either through special dividends or buyback plans.

What may happen finally is that the government may send out an ‘advisory’ and not an order to top profit-making and cash-rich PSUs to make the payments.

Steel Authority of India chairman C S Verma chose not to comment on the issue. No comments came also from the chairmen of BHEL, Coal India, ONGC, PFC and NTPC.

At a meeting with PSU chiefs on December 3 the prime minister directed administrative ministries to speed up mobilising the targeted Rs 40,000 crore from disinvestments. After the meeting, Chidambaram had told reporters: “BHEL and Coal India have been asked to come back with various options. These options are buyback, dividend payments, disinvestments.”

But neither is willing to exercise any of these options over the next three months before Chidambaram presents his interim budget ahead of the Lok Sabha elections, an official said. The nodal ministries are not keen on that their wards part with their cash.

A Crisil report has projected that the 20 top PSUs will have Rs 27,000 crore in surplus cash by March 31.

Proportionate to its shareholding in these companies, the centre will be able to mobilise Rs 20,000 crore as special dividends.

The 20 companies are BHEL, BPCL, Coal India (CIL), Containers Corporation of India, Engineers India, GAIL, MMTC, MOIL, Nalco, NLC, NHPC, NMDC, NTPC, Oil India, NDMC, ONGC, Power Grid, SCI, SAIL and SJVNL.

In the last financial year, the government received Rs 37,000 crore as dividends which helped to keep its deficit under control; but other macro-parameters went haywire.

Sandeep Sabharwal, senior director of Crisil Research, told Financial Chronicle: “The government could persuade these companies with large cash reserves to announce special dividends or buyback. Otherwise, any cut in government expenses will impact growth.”As against Rs 1,70,000 crore in cash held by these companies on April 1 this year, they will have Rs 1,60,000 crore on April 1 next year. Crisil says the companies are in a position to distribute 40 per cent of their corpus — Rs 64,000 crore — as dividends and special dividends.

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