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Coal India has ability to pay dividend of Rs 10,000 crore

The government has sold 4.8 per cent stake in the company for Rs 5,700 crore in two tranches.

, ET Bureau|
Last Updated: Mar 06, 2020, 09.09 AM IST
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coal India
The company is in talks with the government on this issue, and has called a board meeting on Friday to consider dividend payment.
Kolkata: Coal India’s has the ability to pay a dividend of at least Rs 10,000 crore, higher than the target of Rs 9,000 crore that was set at the beginning of the fiscal year, analysts and experts said.

The company is in talks with the government on this issue, and has called a board meeting on Friday to consider dividend payment. The government will also receive dividend distribution tax.

The government has sold 4.8 per cent stake in the company for Rs 5,700 crore in two tranches and now holds 66.14 per cent in the company. This entitles it to a dividend receipt of about Rs 6,600 crore on a dividend payment of Rs 10,000 crore. It will also receive dividend distribution tax at the rate of 20.56 per cent, estimated at around Rs 2,056 crore.

Six out of the eight India subsidiaries have recently paid total dividend of about Rs 10,000 crore to its holding company, Coal India, said an executive. Earlier loss making, Eastern Coalfields and Bharat Coking Coal did not pay any dividend this time since they have accumulated losses to make good.

According to the memorandum of understanding it signed with the Centre, its cash and bank balance was estimated to be about Rs 20,886.55 crore by the end of the year.

After payments from subsidiaries, CIL’s cash and bank balance stands at around Rs 30,000 crore, of which Rs 10,000-12,000 crore will be required for working capital, the executive said. Another Rs 8,000 crore is earmarked for a specific development fund, which cannot be given away as dividend, said the executive. This leaves Rs 10,000-12,000 crore for dividend payment.
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