Analysis of Dividend Paid by the Company in Last Five Years and Feasibility of Investment in the Company

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Roll No.: 9

Name: Arindam Roy

PRN: 16020441009

Company: Coal India Limited

Topic: Analysis of dividend paid by the company in last five years and feasibility of investment in the company

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Introduction:

Coal India Limited (CIL) is one of the seven ‘Maharatna’ Central Public Sector Enterprises (CPSE) of India, headquartered at Kolkata in the state of West Bengal; the others being Oil and Natural Gas Corporation (India) Limited, Indian Oil Corporation Limited (IOCL), Gas Authority of India Limited (GAIL), National Thermal Power Corporation (NTPC) Limited, Bharat Heavy Electricals Limited (BHEL) and Steel Authority of India Limited (SAIL). Coal India Limited was conferred upon the ‘Maharatna’ status by the President of India on 11th April, 2011 (source: Business Standard, April-11, 2011). ‘Maharatna’ status enables board of a Central Public Sector Enterprise (CPSE) to make investments up to INR 5,000 crore in a joint-venture project or a wholly owned subsidiary without the permission of the government (source: Business Standard, April-11, 2011). Coal India Limited holds numero uno status in the world in terms of production of raw coal and also holds the distinction of having the largest reserves of coal in the world. Coal India Limited operates through nine subsidiaries viz. Northern Coalfields Limited (NCL), Eastern Coalfields Limited (ECL), Western Coalfields Limited (WCL), South Eastern Coalfields Limited (SECL), Central Coalfields Limited (CCL), Bharat Coking Coal Limited (BCCL), Central Mine Planning and Design Limited (CMPDIL), Mahanadi Coalfields Limited (MCL) and Coal India Africana Limitada (CIAL). Coal India Limited started as a private limited company under the name of Coal Mines Authority Limited on 14th June, 1973 (source: www.capitaline.com) . The company went public with Initial Public Offering (IPO) by listing itself on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on 4th November, 2010 (source: www.capitaline.com) with offer price of INR 245 per share at face value of INR 10 per share (source: Economic Times, October-26, 2010). The IPO was oversubscribed by 14.17 times (source: Economic Times, October-26, 2010). The company received bids for INR 2400 billion (source: www.moneycontrol.com, October-26, 2010). The share price was upped by forty percent than the price of the IPO on the first day of its listing (source: Economic Times, November-05, 2010) and it became the most valued company in India, with a market value of INR 2.16 trillion (source: Economic Times, November-05, 2010). Government of India offloaded a further stake of ten percent in Coal India Limited on 30th January, 2015 through ‘Offer for Sale’ (OFS) and collected INR 225.5763 billion from the market, thus making it the largest ever equity offering in the Indian share market (source: Economic Times, January-31, 2015).

Company at a glance (source: www.capitaline.com):

• Owned by: Government of India
• Industry sector: Mining and mineral products
• Products:

• Coking Coal
• Semi Coking Coal
• NLW Coking Coal
• Non Coking Coal
• Washed and Beneficiated Coal
• Middlings
• Rejects
• CIL/LTC Coke
• Coal/Coke Fines
• Tar/Heavy Oil/Light Oil/Soft Pitch

• Incorporated in: 14th June, 1973
• Chairman and Managing Director: Sutirtha Bhattacharya
• Director (Finance): Chandan Kumar Dubey
• Director (Technical): N Kumar
• Director (Personnel & Industrial Relation): R Mohan Das
• Director (Marketing): S N Prasad
• Company Secretary: M Viswanathan
• Auditor: Chaturvedi & Co
• Registered office: New Town, Rajarhat.  Kolkata – 700 156. West Bengal
• BSE Code: 533278
• NSE Code: COALINDIA
• Total Turnover at the end of financial year 2015-2016: INR 78010.12 Crores
• Total Employees: 333097
• Share in India’s overall coal production: 81.1%
• Share in India’s coal market: 74%
• Coal supplies to Indian thermal power plants: 82 out of 86
• Share in India’s primary commercial energy requirement: 40%
• Accolades:

• Fastest Growing Award
• Rashtriya Khel Protsahan Puraskar
• Best implementation of official language policy
• Geospatial Award
• CSR Award
• Featured in Platts Global Energy Company Rankings
• CIL Director (P&IR), conferred HR Award

Dividend:

Whenever any listed corporation or a company makes profit on accord of its business, it reinvests a part of it in the business and shares another fraction with its shareholders. The fraction of the profit, which, a listed company, shares with its shareholders is known as “dividend”. The shareholders receive dividend in proportion to their shareholding. Listed companies pay dividend, usually, pay dividends to their shareholders on a fixed time period of the year, but, sometime, they may prefer to declare and pay dividend at an unusual time, which is known as “special dividend”. The word ‘dividend’ is derived from the Latin word “dividendum”. Dividends are paid to shareholders in following forms: