The Centre will be getting a total amount of Rs 7172 crore this year from Coal India which is 6.52 per cent lower than what it received in the last fiscal year. In 2018-19, the Centre got a total amount of Rs. 7672 crore.
The amount is inclusive of dividend distribution tax (DDT) which stood at Rs 2282 crore during 2019-20 and Rs 1833 crore during 2018-19.
On Thursday, the Coal India board sanctioned a total amount of Rs 9677 crore inclusive of the DDT as interim dividend at a rate of Rs 12 per share. In the last fiscal year, the interim dividend stood at Rs 13.10 per share.
Incidentally, after taking forward its disinvestment drive, the Centre, from a stakeholding of 70.96 per cent as on April 2019, now owns 69.05 per cent in this company.
“The interim dividend this year is lower than last year and also the government’s shareholding in the company has decreased. This has resulted in the Centre getting lower amount of money from Coal India this year as compared to the previous year”, a senior Coal India official said.
The record date for payment of the dividend has been fixed on March 26.
Incidentally, while the government lowered its stake, foreign portfolio investors (FPI) have been increasing this holding. From a 7.13 per cent stake in Coal India, FPIs now own 8.59 per cent in the world’s largest coal miner.
The dividend will be distributed to the shareholders in proportion to their shareholding.
The company official reasoned that the dividend payout this year is lower on account of the company’s performance when coal production was hit and the demand for coal has also declined.
In fact, from April 2019 to February 2020, Coal India’s total production declined by 1.9 per cent at 517.78 million tonne (mt) while sales volume fell by 3.7 per cent at 528.27 mt. The same during the corresponding period of the 2018-19 fiscal year stood at 527.69 mt and 548.53 mt respectively.
According to Care Ratings, lower coal production during the first nine months of 2019-20 was due to prolonged rains and labour unrest. Production from a number of high yielding open cast mines like Gevra, Dipka and Rajmahal was almost reduced to a trickle due to inundating rain.
Adding further to the Maharatna company’s woes, in September 2019, a non-perennial, seasonal river Lilagarh breached its embankment and flooded the lower benches of 35 mt Dipka opencast mine.
Besides, the Centre’s decision to allow private foreign investments in coal mining led to labour strikes during September 2019 leading to a sharp fall in coal production during April-November 2019.
Besides, coal officials said that the coal demand had been muted in 2019 which led to lower sales volume and direly impacted its revenue and profitability. During the April-December period, sales revenue declined by 7.78 per cent at Rs. 21566.41 crore while pre-tax profit fell by 24.09 per cent at Rs. 5335.77 crore.
The ratings agency noted that coal production returned to the growth path after the monsoon receded but Coal India fell short of its annual production target.
“Coal production rose by 7-14 per cent in each of the last three months. On a cumulative basis, the company has been able to narrow its fall with recent growth in production levels. Coal India’s production for April-February stood at 517.8 mt, compared with 527.7 mt in the same period a year ago”, Care Ratings said.