Commending the central public sector enterprises (CPSEs) for paying a record dividend relative to their market cap share, department of investment and public asset management secretary Arunish Chawla on Wednesday urged the private sector companies to also pay a ‘fair’ dividend to reward minority shareholders to create a vibrant market.
With common citizens not reaping the full benefit of the market capitalisation surge of CPSEs in the last couple of years as well as their high dividend payouts, Chawla would be meeting the mutual funds industry next week to impress upon them to include more CPSE stocks in their portfolios.
“We would also nudge private corporates to declare fair dividends to their minority shareholders. So, that, together, we can make our share market a better place for the aam admi (common man),” Chawla said.
CPSEs (excluding state-run banks and financial institutions like LIC) paid a whopping dividend of Rs 74,017 crore in FY25, aided by Dipam’s integrated value creation framework to retain investors’ interest in the stocks. The Centre’s share was roughly 49.3% of Rs 1.5 lakh crore dividends paid by CPSEs to all investors, including minority shareholders in FY25. Savings productively
“While market capitalisation of (65 listed) CPSEs is only 10% of overall market cap, they have distributed 23% of total dividends,” Chawla said, pointing out that private listed companies’ share in total dividends was 77% compared to their 90% share in m-cap in FY24.
To broaden the investor base and give an opportunity to citizens to participate in the public sector growth story, Dipam will nudge mutual fund houses to include more CPSEs’ stocks in their portfolio.
“We would suggest to fund managers to include more PSU stocks in their portfolio so that common investors and senior citizens can deploy their savings productively and participate in the value created by public enterprises,” Chawal said.
According to the extant guidelines, every CPSE would pay a minimum annual dividend of 30% of profit after tax (PAT) or 4% of the net worth, whichever is higher. However, there is no such set rule for private sector corporates, and their annual dividend payout is around 20% on average.
In uncertain times, domestic investors, including retail investors, have played a greater role in curbing stock market volatility when foreign investors take out their money.
Chawla said the department will calibrate disinvestment in the current financial year based on market conditions.