Generous with dividend

Written by Pradip Kumar Dey | Updated: Aug 15 2011, 06:37am hrs
Central PSUs paid 31% more in dividend to their shareholders in the financial year 2010-11, compared with the previous year, thanks to an improvement in the business environment that helped them earn higher revenue and profits.

Significantly, 2008-09 was a tough year for Indian businesses, including PSUs, because of the global slowdown. Demand rebounded in the succeeding years as the impact of the recession started fading away.

An FE study shows that 33 central PSUs (excluding banks and NBFCs) contributed R22,898 crore in dividend to the government kitty during 2010-11, 31.1% more than the previous year.

The shareholders of three most valued PSU firmsoil exploration giant ONGC, electricity generator NTPC and oil refiner IOCLhave received more than half of the total dividend declared by the 33 PSUs during 2010-11.

Government holding in ONGC is 74.14%, while in NTPC it is 84.50%. State holding in IOCL is also over 78.92%, and it is 80.4% in Engineers India. BHEL and SAIL have government holdings of 67.72% and 85.82%, respectively.

ONGC showed the highest increase of 103% in promoters dividend during 2010-11, to R10,624 crore from R5,233 crore. The group sales of ONGC increased by 17.9% to R1.22 lakh crore during 2010-11. The net profit of the group also increased by 15.6% during the period.

BHEL showed a significant increase in dividend payment during 2010-11. The government has received nearly R1,032 crore as dividend for 2010-11, which is 33.7% more than what it got for 2009-10. The sales and net profit of BHEL increased by 26.6% and 39.4%, respectively during 2010-11. Total orders in hand for execution in 2010-11 and beyond stand at about R43,800 crore currently.

During 2009-10, the company secured orders worth R59,031 crore.

Steel giant SAIL also paid a hefty dividend of R851 crore to the government kitty during 2010-11, which is 27.3% less than what it paid in 2009-10. Though the sales of the company marginally increased by 5.1% during 2010-11, the net profit decreased by 27.4%.

The top five PSUs according to dividend payment to government during 2010-11 were ONGC, NTPC, IOCL, NMDC and BHEL.

The business environment for PSUs has been extremely favourable in 2010-11, with some of them recording substantially positive bottomline growth. Though the dividend rate for some companies has been spectacular during 2010-11, they have not translated into larger dividend payout for the government, given the inherently small size of these companies.

Thus, a company such as Tide Water Oil declared a dividend rate of 600% during 2010-11, but that added only R1.37 crore in government kitty.

The turnover recorded by Tide Water Oil was the highest-ever in its history at R861 crore as compared to R751 crore in the previous year, an increase of 14.6%. The company also achieved a profit before tax of R94 crore as compared to R89 crore in the previous year.

A dividend rate of 50% declared by TN Newsprint added only R12.22 crore to the government kitty. Here also, the company reported total revenue of R1,184 crore for the year ended March 31, 2011 against R1,025 crore reported for the previous year. The companys profit after tax has increased to R149 crore, up by 18%.

Out of 33 PSUs, 45% PSUs increased their promoters dividend during 2010-11.