After receiving more than Rs 11,500 crore from Coal India, the centre is further expected to receive around Rs. 2,600 crore more from this Maharatna company after the mining mammoth has decided to offer its second round of interim dividend at Rs. 5.85 per share.
Company estimates suggest that the total outgo on account of this second round of dividend is to the tune of Rs 3,605 crore which it will start to pay March 29 onwards. After three rounds of stake sales, the Centre currently holds 72.92 per cent in Coal India while the rest is held by public shareholders.
This projected payment to the government is exclusive of another ongoing share buyback programme undertaken by the company which will be completed on March 15. From this buyback too, the government is expected to receive a substantial sum of money. The maximum size of this buyback is Rs 1,050 crore.
This buyback is also likely to marginally alter the shareholding structure of the company and thus the exact amount of payment to the government and the public shareholders couldn’t be ascertained.
In December, 2018, this public sector enterprise had paid a total amount of Rs. 4500 crore as its first interim dividend from which the government is projected to have received around Rs 3280 crore.
However, the divided this time is 19 per cent lower as compared to the first interim dividend of Rs 7.25 per share which the company offered in the current fiscal year.
“This dividend is based on the performance of the company in the recent past quarters”, a company official said.
While Coal India, in the past had paid hefty dividends, of which the government was the largest beneficiary, sources suggested that the interim dividend henceforward would be falling on account of depleting cash reserves which may be needed to scale up performance.
The company had decided to upgrade its mines as well as invest in mine productivity, which would entail a likely investment of Rs 12,500 crore. Besides, its ongoing project to develop coal corridors for better evacuation of coal via the rail network, will also be expenses more than Rs 50,00 crore. Once these railway links become fully operational, it will raise Coal India’s evacuation capability by 100 million tonne.
Executives added that the company will also be opting for direct ownership of railway wagons, which again will involve substantial investment.
Moreover, it is also partnering with NTPC to develop pit-head power generation stations in remote locations where evacuation is a big challenge. It is also expected to expand its operations in Australia as well to secure coking coal mining rights.