As part of its resource generating exercise, the Finance Ministry on Friday held discussions with ten public sector units to determine special dividend and enhance their regular dividend for the year 2005-06.
The Finance Ministry on Friday held discussions with top officials of 10 of the 16 public sector companies, which have been has asked to pay a special dividend and also enhance the rate of normal dividend, sources said.
The companies that were invited for consultations on Friday included National Aluminium Company, Bharat Heavy Electronics Limited, Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited, Gas Authority of India Limited, Neyveli Lignite Corporation, National Mineral Development Corporation, Oil India Ltd and Steel Authority of India Limited.
"The 10 companies have been asked to indicate by Friday night how much special dividend and enhanced rate of normal dividend they can pay," sources added.
The meetings would be held with officials of Hindustan Aeronautics Limited, National Thermal Power Corporation, Power Finance Corporation, Rural Electrification Corporation, Shipping Corporation of India and Nuclear Power Corporation of India Limited on Monday.
The government has, however, not set any target for raising the resources from the exercise.
According to sources, Friday's meeting was held basically to assess the financial position of the profit-making PSUs, how much funds they need for expansion and other purposes and how much they can give as dividend to the government.
"The objective of the meetings was to convey to them that they should not sit on idle cash. Whatever surplus they have should be put to use. The intention of the government, however, is not to squeeze them," sources added.
On November 23, 2005 the government had issued a circular asking all profit-making Public Sector Enterprises to declare a minimum dividend on equity of 20 percent or 20 percent of post-tax profits, whichever is higher, subject to availability of disposable profits. In respect of oil, petroleum, chemical and other infrastructure sectors, this amount was pegged at 30 per cent.
Besides, it had asked profit-making companies with large cash surpluses and without firm plans for reinvestment to declare special dividends.
PSUs having large free reserves and sustainable profitability were told to issue bonus shares. Companies with high market price of shares were told to consider stock splits. The issue of stock split and bonus shares was, however, not discussed on Friday.
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