Coal India doles out Rs 18,317 cr dividend

#1
Rs 16,486 cr goes into govt kitty, Rs 1,000 cr to FIIs
Coal India doles out Rs 18,317 cr dividend
Cash-rich Coal India on Tuesday announced an interim dividend of Rs 29 per share for 2013-14. The outgo will be a whopping Rs 18,317 crore, of which Rs 16,486 crore will go directly to the government at a time when the disinvestment target of Rs 40,000 crore for the year looks beyond reach.

The payout by the world’s largest coal miner will also help the government garner another Rs 3,113 crore indirectly, on account of dividend distribution tax (17 per cent), taking its total monetary gain to Rs 19,600 crore.

Coal India had paid a dividend of Rs 14 per share last year when the total payout on this count was Rs 8,843 crore, numbers dwarfed by the dividend outgo this year. Most market men were anticipating a higher dividend payout this time. The actual dividend announced is way higher than their expectations.

LIC, which held 1.83 per cent, or 1.157 million shares, in Coal India on December 31, gets a dividend payment of Rs 335.6 crore. FIIs, which hold 5.47 per cent in CIL, will take away Rs 1,001 crore.

It held less than 1 per cent at the end of calendar 2012 and started raising stake in Coal India to 1.23 per cent by March and 1.83 per cent by December-end. Including LIC, the public shareholders in Coal India will receive Rs 1,832 crore as dividend. Of the 10 per cent public shareholding, foreign institutional investors held 5.47 per cent; domestic institutional investors 2.42 per cent and non-institutional investors 2.11 per cent. There were 6,23,960 shareholders in Coal India as at December-end.

The Children Investment (TCI) Fund, earlier with 1.01 per cent stake, reduced it to under 1 per cent or may have completely exited Coal India. In June 30, 2013 disclosures TCI’s name didn’t figure among those holding more than 1 per cent. TCI had alleged that the government abused its power as majority shareholder in Coal India.

On Tuesday the Coal India stock shed 0.12 per cent and closed at Rs 289.90.

“We were expecting a dividend of Rs 20 per share; the actual announcement surprised us. We believe other cash-rich PSUs, especially NMDC, could also announce a high dividend,” said Rikesh Parikh of Motilal Oswal Securities.

Pankaj Pandey of ICICI Securities said, “The dividend announced by the coal company was far more than what we and the market were expecting.” Pandey expects NMDC to pay high dividend.

NMDC had cash and cash equivalent of Rs 22,519 crore on September 30.

“From state-run lenders, one can expect early dividend announcements rather than higher dividends,” Parikh said. The government was earlier keen to sell 5 per cent stake in Coal India and held road shows abroad for the purpose. But following opposition from Coal India’s trade unions, it had to drop the disinvestment plan.

Ever since, market participants had been expecting a higher dividend payout. A cash pile of Rs 67,016 crore and the government attempt to garner more revenue were pointers.

Anirudh Gangadhar of Nomura India in a note on Monday had anticipated a ‘high interim dividend’ of Rs 18 per share. JP Morgan too had expected a higher dividend payout.

The dividend announced will help the government’s finances and also be cheered Coal India’s 6,20,000 retail investors. Kunal Bothra of LKP Securities said, “Whenever a company announces dividend more than 10 per cent of the share value, the share in the cash market goes into selling mode. In Coal India’s case, there also will be buyers as many investors will like to earn tax free dividend.”

“The share will rise in the cash market tomorrow but in the futures & options segment the January futures of Coal India will correct by Rs 29,” Bothra said.
 

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