Despite the global economic crisis, central PSUs declared hefty dividends in 2009-10. The 34 central PSUs that have declared dividends last fiscal contributed Rs 15,258 crore to the government kitty, an increase of 12.4% over the year 2008-09.
Out of 34 PSUs, 56% declared a higher dividend rate in 2009-10. This, according to Jagannadham Thunuguntla, equity head of SMC Capitals, is not surprising, given that PSUs had negotiated the global meltdown relatively safe last fiscal. ?PSUs have been the cash cows for the government. They have handled the downturn fairly well?, he said.
However, Thunuguntla said, the overall growth in dividend for the government was modest. ?As the PSUs would be needing the funds for their expansion, the dividend payout has seen only a modest rise of 12.4%?, he said.
The promoters of three most valued undertakings?-oil exploration giant ONGC, electricity generator NTPC and oil refiner and marketer IOC?-received over a half of the dividends declared by the 34 PSUs.
Kishor P Ostwal, CMD of CNI Research, sees traces of cash-stripping here. ?It is a government policy to take maximum dividend as well as get bonus shares wherever feasible before stake dilution in order to improve the market capitalisation of these companies. Special dividend is nothing but cash-stripping as the government is the largest shareholder of these companies.?
The government holding in ONGC is 74.14%, while in NTPC, it is 84.5%. Its holding in IOC is also over 78%, and in Engineers India, 90.4%. Bhel and SAIL have government holdings of 67.72% and 85.82%, respectively.
A premier design & engineering consultancy company, Engineers India showed the highest increase of 860% in promoters? dividend in 2009-10. From a dividend of Rs 32 crore during 2008-09, the payout to EIL promoters increased to Rs 304 crore during 2009-10.
The nine-month performance of Engineers India was impressive. Its sales rose by 20.3% to Rs 1,353 crore during April-December ?09. Its net profit also increased by 67.3%. The company is now diversifying into several new areas, including nuclear energy, solar energy, gas-based fertilisers & power plants and city gas distribution.
Electrical engineering giant Bhel has also shown a significant increase in dividend payment during 2009-10. The government has received nearly Rs 629 crore as dividend last year, which was 24.6% more than the previous year?s. The sales and net profit of Bhel increased by 25% and 37.3%, respectively, during 2009-10. Bhel builds power equipment with a generation capacity of up to 10,000 MW. It projects to raise the equipment capacity to 20,000 MW by 2011-12.
Steel giant SAIL also paid a hefty dividend of Rs 1,028 crore to the government kitty during 2009-10. Though its nine-month sales and net profit decreased by 34.2% and 24.4% respectively.
The top five PSUs according to dividend payment to government during 2009-10 are ONGC, NTPC, IOC, SAIL and NMDC. But in 2008-09, the top five were ONGC, NTPC, SAIL, GAIL(I) and NMDC. Four companies namely ONGC, NTPC, SAIL and NMDC are common in both the list of top five.
The business environment has been extremely favourable for PSU companies last year, with some of them recording substantially positive bottom line growth during 2009-10.
Though the dividend rate of some companies has been spectacular during 2009-10, they have not translated into a larger dividend payout for the government, given the inherently small size of these companies.
Thus, a company like Tide Water Oil has declared a dividend of 300% during 2009-10, but that added only Rs 0.43 crore to the government kitty. A dividend rate of 309% declared by Ircon International meant only Rs 18.76 crore for the government.
