| Ninety-one companies have proposed to pay interim dividends of Rs 4,577 crore for the financial year 2006-07 due to the dividend distribution tax (DDT) increase announced in the Budget for 2007-08.
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| The DDT is paid by companies on dividends distributed to their shareholders. To avoid the double taxation, the dividends are tax free at the hands of the recipient.
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| Interim payout proposals by these 91 firms will deprive the central exchequer of Rs 137 crore as the Budget for 2007-08 has proposed to increase the DDT from April 1, 2007 from the existing 12.50 per cent (effective 14%) to 15 per cent (effective 17%).
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If dividends are distributed after March 31, 2007 the 91 firms would have had to pay Rs 778 crore. If distributed before March 31, the DDT will be Rs 641 crore.
| THE BIG PAYMASTERS |
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Interim % |
| Larsen & Toubro |
550.0 |
| FDC |
500.0 |
| LMW |
400.0 |
| Eicher Motors |
290.0 |
| Grasim Inds |
275.0 |
| Solvay Pharma |
250.0 |
| Merck |
200.0 |
| Hercules Hoists |
200.0 |
| Balaji Telefilms |
175.0 |
| Thermax |
170.0 |
| Hindalco Inds |
170.0 |
| CRISIL |
150.0 |
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| The interim payouts booty will enrich the promoters of India Inc by Rs 2,239 crore. The balance Rs 2,378 crore will be distributed among foreign institutional investors, institutional investors and public holders.
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| Interim payout, however, is up by a modest 7.75 per cent over the dividend of Rs 4,248 crore paid by these firms in the financial year 2005-06. This means there is a possibility of these companies proposing final dividends for the year when they finalize their audited accounts for 2006-07.
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| The major interim dividends announcements were by Reliance Industries (110 per cent), Larsen & Toubro (550 per cent), Hindalco (170 per cent), Grasim Industries (275 per cent), JSW Steel (125 per cent), IPCL (60 per cent), Suzlon Energy (50 per cent) and Sun Pharmaceuticals (135 per cent).
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| Mukesh Ambani, who holds over 50 per cent stake in Reliance Industries will benefit the most from the interim payout. He will take home Rs 816 crore out of the total dividend of Rs 1,719 crore proposed by Reliance Industries (Rs 1,533 crore), IPCL (Rs 180 crore) and Reliance Industrial Infrastructure (Rs 5 crore).
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| Four Aditya Birla group companies – Hindalco, Grasim Industries, UltraTech Cement and Aditya Birla Nuvo -- will pay Rs 545 crore interim dividend. The promoters will take home around 29 per cent of this (Rs 159.59 crore).
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| Eicher Motors declared 290 per cent (Rs 29 per share) interim dividend for the FY06-07 that includes the one time special dividend of 250 per cent against 40 per cent (Rs 4 per share) paid in FY05-06.
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| Solvay Pharma declared an interim dividend of Rs 25 (250 per cent) per equity share of Rs 10 for the year 2007 against Rs 8 (80 per cent) in the previous year. Lakshmi Machine Works announced Rs 40 (400 per cent) interim dividend against Rs 30 (300 per cent) total dividend paid in previous year.
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| Of these 91 firms, 37 companies hikes the rate of dividend up to a maximum of 25 per cent and 29 firms has maintained the same rate, while 25 companies declared lower dividend than what they paid in FY05-06.
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| UltraTech Cement, Aditya Birla Nuvo, MIRC Electronics, Apollo Tyres, Zandu Pharma, Asian Paints, Bajaj Electricals, MICO, Eicher Motors, Wockhardt and Nirma are the other large-cap and mid-cap firms that declared interim-dividends for the financial year 2006-07. |
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