Mining companies to pay 30% dividend on net profit

Keeping in view the uneven trend in receipts from dividend in the past, the state finance department has come out with new guidelines for payment of dividend by the profit making state PSUs based on similar guidelines issued by the Government of India.

The minimum dividend payout in respect of PSUs in the mining and power generation sector should be 30 per cent of post tax profits.

It needs to be ensured by the concerned administrative departments that the profit making PSUs under their control declare a minimum dividend of 20 per cent on the equity or a minimum dividend payout of 20 per cent of profit after tax, whichever is higher.

All profit making joint venture companies should be asked by the concerned administrative departments to make concerted efforts to give a dividend of 20 per cent on government equity holding.

The new guidelines also say that all profit making companies must consider issuing bonus shares to the government.

The state government is entitled to dividend out of the profits on the basis of its majority shareholding in the state PSUs which includes government companies, statutory corporations and joint venture companies. Dividends on shareholdings help in maximization of the shareholder's value and are also indicative of return on investment. They are also a source of revenue for the state government.