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Coal India may hand out record interim to Centre

<p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Coal India Ltd. (CIL) may place a proposal for a record high interim dividend of around INR 15,000 crore compared to INR 6,000 crore interim in the previous fiscal, before its board members at its meeting next week. It had paid INR 8,842 crore dividend for the full year in fiscal 2013.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The issue of considering an interim dividend and placing it before the board has been advanced in view of the government&rsquo;s move to tap the cash-rich public sector units pay higher dividends to help improve its fiscal management. It had targeted to raise INR 40,000 crore through disinvestment of its stake in a few CPSU, including CIL. It has been able to raise very little even as several sale offers were shelved in view of tough ground realities like the impending elections and the uncertain stock market.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Sources said that although normally the interim dividend was finalised along with the third quarter results in February, this time matters have had to be hastened as the government was in a hurry to raise funds. CIL had declared its 2012-13 interim in March.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">In the case of CIL, the government&rsquo;s calculations have gone awry due to the failed attempt at an offer for sale (OFS) last year which was reportedly spiked, with the elections approaching.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">The 10 percent OFS was pared to 5 percent, but even that was put on the backburner in December 2013. This was expected to raise about INR 9,000 crore.&nbsp;</span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">The government holds 90 percent in the coal major.</span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The record interim, if it materialises, will come in a year when CIL&rsquo;s bottomline is under pressure. Although topline is likely to grow by around 4 percent in 2013-14, bottomline may stay at last year&rsquo;s levels.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">CIL&rsquo;s profits during the first-half were lower by INR 762 crore at INR 6,783 crore in the April-September 2013 period.</span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Sources said that its cost of production was facing inflationary pressure. Hike in diesel prices have pushed up costs by INR 2,000 crore while DA neutralisation for its 3.6 lakh-odd employees have resulted in an additional outgo of INR 500 crore.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The dividend would be paid from accumulated profits, it was learnt.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Source-On Request</span></span></span></p>