More dividend from CPSEs difficult in FY13

It will be difficult for the government to collect additional revenue this financial year from Central Public Sector Enterprises (CPSEs) through dividends, despite pressure from the Prime Minister’s Office on the cash-rich ones to either step up investment or pay special dividends.

Analysis of the dividends issued by CPSEs in 2011-12 after sustained pressure from the finance ministry shows those capable of paying more have already stretched themselves. More, very few were significant contributors in meeting the target enhanced in the revised estimate last year. The target for dividends from CPSEs in 2011-12 was kept at Rs 23,494 crore and revised to Rs 28,087 crore.

The top four CPSE dividend contributors in 2011-12 were Oil and Natural Gas Corporation, Coal India, NTPC and NMDC. ONGC increased its payout on this account to the government from Rs 5,550 crore in 2010-11 to Rs 5,775 crore in 2011-12. Coal India’s contribution rose substantially from Rs 2,217 crore to Rs 5,685 crore during the period. NTPC raised its dividend payout to the government from Rs 2,648 crore in 2010-11 to Rs 2,787 crore in 2011-12. With NMDC, the payment rose from Rs 1,178 crore to Rs 1,606 crore in this period.
 

TOP-TEN CONTRIBUTORS
Company	Dividend Rs cr		Govt stake %		Govt share div (Rs cr)*
	FY11	FY12	Mar '11	Mar '12	FY11	FY12
ONGC	7,486.05	8,341.61	74.14	69.23	5,550.16	5,774.90
Coal India	2,463.38	6,316.36	90.00	90.00	2,217.04	5,684.72
NTPC	3,133.26	3,298.19	84.50	84.50	2,647.60	2,786.97
NMDC	1,308.35	1,784.12	90.00	90.00	1,177.51	1,605.71
SBI	1,905.00	2,348.66	59.40	61.58	1,131.57	1,446.30
BHEL	1,524.85	1,566.47	67.72	67.72	1,032.63	1,060.81
IOCL	2,306.55	1,213.98	78.92	78.92	1,820.33	958.07
Oil India	901.70	1,142.15	78.43	78.43	707.20	895.79
NHPC Ltd	738.04	861.06	86.36	86.36	637.37	743.61
SAIL	991.30	826.10	85.82	85.82	850.73	708.96
*Calculated on the basis of promoters’ stakes as on March-end of the rspective FY; Data source: Capitaline Compiled by BS  Research Bureau

On the back of these additional payouts, the government succeeded in surpassing the total ‘dividend and profits’ item target of Rs 50,122 crore in 2011-12, revised from the Rs 42,624 crore fixed in the Union Budget. This included dividends and surplus from the Reserve Bank of India, nationalised banks and financial institutions, besides CPSE dividends.

Though the contribution of dividends has grown substantially in recent years, experts feel pressure from the government on CPSEs for additional payments is not a healthy exercise.

The Budget target for CPSE dividends in this financial year has been pegged at Rs 27,178 crore and the total ‘dividend and profits’ payment to Rs 50,153 crore.