With no sizeable capital expansion plans, corporate India decided to be generous for financial year 2010, with its biggest-ever dividend distribution to shareholders.
The 980 listed firms that declared a dividend for the year ended March have proposed to pay Rs 70,400 crore. This is 26.3 per cent more than the Rs 55,722 crore paid for the year ended March 2009.
The payout rise was higher than that in net profit, which was 21.5 per cent. As a proportion of net profit, the payout was 25.15 per cent, compared to 24.1 per cent in March 2009 and 21.8 per cent in March 2008.
Home Run
The big benefiters of this generosity were the promoters themselves. For instance, Mukesh Ambani, who holds 41.08 per cent in Reliance Industries through his family and privately held companies, received Rs 940 crore via equity dividend. Brijmohan Lall Munjal and his family was richer by 636 crore via the 28.96 per cent stake in the country’s largest motorcycle company, Hero Honda. Azim Premji, who holds 79.52 per cent in Wipro through a family trust, got Rs 700 crore.
Kalanithi Maran, promoter of Sun TV, got Rs 227 crore on account of his 77 per cent stake in the company. Dilip Shanghvi, promoter of Sun Pharma, and Gautam Adani, promoter of the Adani group, also got richer by around Rs 200 crore each. Among the promoters of Infosys Technologies, Narayana Murthy and his family received Rs 71.21 crore, Nandan Nilekani and family Rs 45.19 crore, S Gopalakrishnan and family Rs 47.91 crore, S D Shibulal Rs 31.46 crore and K Dinesh and family got Rs 36 crore.
Public sector promoters got 31.4 per cent of the boodle and private sector ones 23.8 per cent. Public shareholders got all of 8.52 per cent of the total payout. Foreign institutional investors got a little over Rs 10,000 crore or 18.8 per cent, while financial institutions received 8.6 per cent. Corporate bodies and others shared 9.9 per cent.
Better year
Compared to last year, 71 companies reduced payout and 440 kept it unchanged. And, 571 rised the payout. As many as 138 were back in the dividend list. Another 400-odd which paid total dividend of Rs 2,500 crore in 2008-09 have yet to declare their audited results for the year. These are likley to declare a dividend for 2010, too, as they made a combined net profit of Rs 11,250 crore for the year.
Some special dividends were a highlight. Hero Honda Motors, the country’s largest motorcycle manufacturer, declared a special dividend of 4,000 per cent, or Rs 80 for every equity share with a face value of Rs 2. ITC paid a special dividend of 550 per cent to mark its centenary year in India.
Companies with considerably higher profits paid more to shareholders. Tata Motors stepped up dividend from 60 per cent to 150 per cent, Mahindra & Mahindra raised it from 100 to 190 per cent and Bajaj Auto from 220 per cent to 400 per cent. All three had a more than 100 per cent rise in net profit.
Public sector oil companies, too, declared higher payout on the back of a decline in the prices of the oil they bought, compared to 2008-09 levels. Indian Oil stepped up dividend from 75 per cent to 130 per cent, BPCL increased it from 70 per cent to 140 per cent and HPCL from 52.5 per cent to 120 per cent. Chennai Petroleum was back in the dividend list with one of 120 per cent after staging a turnaround in 2010.
Apropos of the statements that with no sizeable capital expansion plans, corporate India decided to be generous for financial year 2010, with its biggest-ever dividend distribution to shareholders and that the big benefiters (? beneficiaries) of this generosity were the promoters themselves, it may be noted that the losers are the state governments, as all income-tax paid by companies must be treated as corporation tax, which is not forming part of the divisible pool. Prior to the introduction of dividend distribution tax, dividend was taxable in the hands of the recipients, mainly individuals, and therefore such tax was within the divisible pool. Experts in the Finance Ministries of the states may like to examine whether my conjecture is correct and, if so, take up the issue at the appropriate level for ri-dress.
Content Guide
With no sizeable capital expansion plans, corporate India decided to be generous for financial year 2010, with its biggest-ever dividend distribution to shareholders.
