Govt may ask PSUs to pay higher dividends

livemint.com:

NEW DELHI : The government may demand higher dividend payouts from state-run companies should it miss revenue targets because of sluggish tax collections or lower-than-expected asset sale proceeds, two people familiar with the matter said. It may also seek special dividends from state-run oil companies, which have reported bumper profits because of soaring crude prices, one of the two people said. However, the plans will depend on the movement of crude oil prices in the coming months and the profitability of these firms.

Also, share buybacks may be sought from select public sector undertakings (PSUs) with substantial cash reserves and significant government shareholdings depending on market conditions. The government will decide how much it wants from these companies after reviewing the September and December quarter earnings of PSUs, the person said, adding that the companies might be asked for higher dividends in the March quarter. “The performance of PSUs, including banks, has been very strong in the first and second quarters.

There are expectations of strong financial performance from public sector enterprises even during the ongoing quarter, which falls during the festive season. The decision to seek higher dividends will depend on the market conditions," the second person said, also on the condition of anonymity. “The movement of crude oil prices will also be a factor in considering special dividends from government-run oil companies.

If oil breaches the $95-100 barrel mark, it will put more cost pressure on the oil marketing companies, especially if the prices (it offers to consumers) remain unchanged. Then the oil companies may be unable to make higher dividend payouts," the person added. A query sent to the