PSUs may have to pay higher dividend to govt -Governance Now

PSUs may have to pay higher dividend to govt

GN Bureau | October 14, 2015

#PSU #public sector #ONGC #Oil India and GAIL

To meet the union budget estimates, all profit-making public-sector undertakings (PSU) have been asked to pay a minimum dividend of 30 per cent of post-tax profit for 2015-16. Earlier, only the upstream oil and gas PSUs were asked to pay 30 per cent dividend while minimum 20 per cent dividend was sought from other PSUs.

However, a final decision on how much dividend these companies pay would be taken by their respective boards.

The budgeted estimate for dividend from public-sector enterprises is Rs 36,174.14 crore - a 27.3 per cent jump from the revised estimates for 2014-15 PSU dividends of Rs 28,423.07 crore. This excludes state-owned banks and financial institutions.

The dividend target for the current year was set based on two points. One, de-control of diesel and petrol along with low commodity prices would lead to lower under-recovery burden for upstream oil and gas behemoths such as Oil and Natural Gas Corporation, Oil India, and GAIL. As a result, they would pay higher dividend than the past few years. Second, the budget planners anticipated asking other profitable PSUs for higher dividends as well.

Even if not all of these PSUs would be able to pay a 30 per cent dividend, the budget planners are confident that the steep jump notwithstanding, the FY16 dividend target will be met. For 2014-15, ONGC, Oil India and GAIL bore a combined under-recovery burden of close to Rs 43,000 crore, while for 2013-14, they bore around Rs 67,000 crore.

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