Hudco in a bind over dividend

The Housing and Urban Development Corporation (Hudco) is seeking an exemption from paying the 30 per cent dividend mandated by the finance ministry for profit-making public sector companies in the infrastructure sector.

The government's decision to ask these public sector undertakings (PSUs) to pay higher dividend has delayed the finalisation of Hudco's annual results for 2003-04.

Equity infusion into Hudco is through the ministries of urban development and poverty alleviation and the rural development. The public sector financial institution is yet to get clear directions from the nodal ministries on the exact rate of dividend to be paid.

With Hudco financing infrastructure works in urban and rural areas, sources said there was a confusion over whether it would be required to pay dividend at 20 per cent or a higher 30 per cent.

A finance ministry directive issued last month directed 120 profitable PSUs to declare a minimum dividend of 20 per cent and issue bonus shares. State-run oil, chemcial and infrastructure firms will have to pay the government a dividend of 30 per cent of their post-tax profits and issue bonus shares as well.

Sources said as Hudco's profit at Rs 332.44 crore was relatively small, the government should exempt it from paying a higher dividend.

"This delayed the Hudco board meeting which had to finalise the results and table it for the subsequent annual general meeting," the sources said.

The company had a paid-up equity share capital of Rs 1898.6 crore on March 31, 2004, and reserves of about Rs 1366.95 crore.

The total dividend payout by public sector enterprises was Rs 12,170 crore in 2002-03. The finance ministry had estimated Rs 12,978.57 crore as dividends from PSUs and other investment for the current year.