British hedge fund, the Children's Investment (TCI) Fund Management, has proposed Coal India Limited (CIL) to pay out its entire annual profit this fiscal as dividend.

In a letter to the company's board, TCI partner Oscar Veldhuijzen said that higher dividend and share buybacks would be the best way for the company to reward its shareholders.

TCI said suggested that the coal miner should deploy its funds productively, and pay at least Rs 30 per share this year.

Making the proposal, TCI said, "Even when CIL pays out 100% of profits in dividends, there is ample room for buybacks or special dividends. CIL should be proactive and start paying at least `30 in dividend per share this year."

For the financial year of 2011-12, the company paid 100 per cent on face value - Rs 9.50 per share as interim and 50 paise per share as final dividend.

At the end of December, CIL had more than Rs 65,000 crore in cash, which is equivalent to 30 per cent of its market capitalization; and estimates suggest that the company's net profit this financial year could be Rs 16,900 crore.

The demanded payout of Rs 30 per share would be three times the CIL's face value of Rs 10 each.