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Coal India to pay ₹7,395 crore interim dividend

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Kolkata: Coal India has decided to pay Rs 7,395 crore of interim dividend at the rate of Rs 12 per share to its shareholders after a round of hard bargaining with the Centre that saw the board meeting postponed from last week to Thursday. Last year, the company paid a total dividend of Rs 13.10 per share totalling Rs 8,105 crore and for this year, the Centre had set a dividend payout target of around Rs 9,000 crore, in case the company managed to produce around 650-660 million tonnes of coal.

Following unpredictable rains and a less-than-expected rise in power demand, Coal India, however, is likely to end the year at around 600-610 million tonnes. At present, the government holds 66.14% in Coal India and would be entitled to Rs 4,891 crore from the declared dividend.

It will receive an additional Rs 2,282 crore on account of dividend distribution tax.

In all, the government will receive a total Rs 7,173 crore via a mix of dividend and the tax. Coal India’s cash and bank balance positions were comfortable to pay a dividend of about Rs 10,000 crore this year, analysts and experts had indicated, after six out of the total eight India subsidiaries had paid a total dividend of similar amount recently.

Eastern Coalfields and Bharat Coking Coal did not pay any dividend this time since they have accumulated losses to make good. After receipt of payment from subsidiaries, Coal India’s cash and bank balance stood at around Rs 30,000 crore of which Rs 10,000-12,000 crore would be required for working capital, a top executive said.

Another Rs 8,000 crore is earmarked for a specific development fund, which cannot be given away as dividend, said the executive.

This left around Rs 10,000-12,000 crore for dividend payment. After paying the announced dividend later this month, the company’s cash and bank balance is expected to reduce to Rs 23,000 crore leaving Rs 12,000-13,000 crore for working capital and the specified fund which cannot be used.

According to a memorandum of understanding signed between the Centre and the dry fuel supplier, cash and bank balance was predicted at around Rs 20,887 crore by the end of the year. “The targets for dividend payment and cash balance were set almost a year ago; hence, there is bound to be a difference between the actual numbers and the targets,” said a Coal India executive. On Thursday, Coal India hit the lower circuit at Rs 151.50 after trading at a new 52-week low of Rs 127.




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