SAIL seeks dividend exemption from government

KOLKATA: Steel Authority of India (SAIL) has sought permission to skip paying dividend to the government of India for the third year in a row, citing losses suffered by the state-owned company in 2017-18.SAIL was exempted from paying dividend due to losses in FY16 and FY17 and this year it is resisting attempts to borrow and pay dividend to shareholders. The government owns a 75% stake in the firm.Without payment from SAIL, the government may find it difficult to meet its target of raising ?1.04 lakh crore through the dividend and profit of state-owned companies in the year ending March 2019.“The company suffered an overall loss in 2017-18. We are thus unable to pay dividend to the government. It is only in the third and fourth quarters of 2017-18 that we earned a profit, which continued in Q12018-19. While the scenario has improved, we need to keep earning profits to repay our debt,” a SAIL spokesperson told ET.SAIL is making a turnaround, having posted a profit for three successive quarters, including ?540.4 crore in the three months ended June 2018.The company’s finances had turned precarious earlier due to cost overruns in its ?70,000-crore modernisation and expansion plan to more than double the hot metal capacity to 23.4 million tonnes.SAIL’s net loss narrowed to ?482 crore in FY18 from ?2,833 crore in FY17 and ?4,021 crore in FY16. Its total loan amount stood at ?45,409 crore in FY18 against ?41,396 crore in FY17.“As per GoI guidelines, the company is required to pay a minimum 30% of profit after tax or 5% of net worth, whichever is higher, to the GoI as dividend, subject to maximum dividend payable under Companies Act 2013, unless lower dividend is justified after analysis of the various financial parameters of the company,” SAIL said in its annual report for 2017-18.If a company is unable to comply with the guidelines, an exemption has to be obtained from the Department of Investment and Public Asset Management.“Keeping in view the financial position of the company due to losses, the company was exempted from payment of dividend in 2015-16 and in 2016-17,” SAIL said, adding that it has applied to the department for an exemption on dividend payment in 2017-18.

from Economic Times https://ift.tt/2C3klRa