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Richa Mishra

New Delhi , Nov. 10

CLOSE on the heels of Oil and Natural Gas Corporation (ONGC) expressing its inability to consider paying a special dividend, GAIL (India) Ltd has also conveyed similar sentiments to the Petroleum Ministry.

This may force the Finance Ministry to scout for other public sector entities in the non-oil sector to mop up revenues of around Rs 4,000 crore through special and interim dividends during the current fiscal.

Speaking to Business Line, a senior GAIL official said the company was asked by the Petroleum Ministry to give details on its financial position. In response to this, GAIL has conveyed to the Ministry its inability to consider any special dividend as it has already made commitment towards fresh investments for the current fiscal. The company is not left with surplus funds, he said.

The company would be having a cash surplus of approximately Rs 2,000 crore during the current fiscal (2005-06) as per the revised estimates, which is yet to be approved by the board. However, in the next fiscal (2006-07), owing to its capital expenditure plans of about Rs 3,000 crore, the company's cash flow would come under strain. The company would be left with about Rs 200 crore if it does not mobilise funds from the market, the official said. The official indicated that the company might look at mobilising funds in the first quarter of the next fiscal to cushion its cash position.

For 2004-05, GAIL has paid a total dividend of Rs 387.94 crore to the Government. Earlier, the company's shareholders at the 21st annual general meeting held in September had approved payment of 80 per cent dividend, including an interim dividend of 40 per cent already declared and paid in December 2004. The dividend payment in financial year 2004-05 represents a payout ratio of 39 per cent.

So far, GAIL has disbursed dividend of Rs 3,694 crore to the shareholders, including the Government. This is more than four times the original investment of Rs 845.32 crore by the Government in the equity capital of GAIL, the official said.

Further, the Government has been disinvesting its shareholding in GAIL from time to time, bringing down its equity holding to 57.345 per cent and thereby garnering for the exchequer an additional Rs 3,400 crore.

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