Dividends likely to rain as firms back in black

So far, 145 companies have paid Rs 12,565 crore as interim dividend for 2009-10

Thanks to the turnaround scripted in the third quarter and prospects of more than 30 per cent growth in the fourth quarter, India Inc is likely to dole out hefty dividends for 2009-10.

The proof is already in store, with 145 listed companies paying Rs 12,565 crore as interim dividends for the last financial year.

Earlier this week, 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.

Usually, when companies earn handsome profits, they reward their shareholders with dividends. And, if the net profit earned by 100-odd companies during the first nine months of the last financial year is an indicator, investors are in for a good time.

Also, around 100 companies, which did not pay dividends for 2008-09 due to losses, are expected to be back in the list, with a dividend payout of around Rs 600 crore out of the aggregated net profit of over Rs 2,300 crore they earned during the first nine months.

For instance, Chennai Petroleum Corporation, which did not declare dividends for 2008-09 on account of losses of Rs 397 crore, is expected to pay dividends this year, as the public sector company reported a net profit of Rs 664 crore for the first nine months. Similarly, JSL, CEAT, Philips Carbon, Apar Industries, Mukand, Shoppers’ Stop, Visa Steel and Ramsarup Industries are back in the black.

The corporate sector generally distributes 22-25 per cent of its net profit as dividends to equity shareholders. In 2008-09, despite a double-digit decline in net profit, partly because of mark-to-market losses and the slowdown, 1,223 companies, whose financial year ended in March 2009, paid Rs 54,000 crore (22.34 per cent of net profit) as dividends. If companies maintain the level of payout for the just-concluded financial year, dividend payments could rise to Rs 60,000 crore.
 

BONANZA TIME
Companies with strong  interim payout	Net profit in Rs crore		Dividend in %
	2008-09	2009-10*	2008-09	2009-10 Interim
Hero Honda	1281.76	1633.02	1000	4000#
Colgate-Palmolive	290.22	308.87	1500	2000
TCS	4696.20	4178.20	1400	600
Financial Tech	368.60	300.53	500	300
Coromandel Inter	496.38	386.13	500	300
Cummins India	433.66	325.56	450	300
EID Parry	691.96	100.48	1000	300
Infosys Tech	5819.00	4373.00	470	200
O N G C	16126.00	12991.00	320	180
B H E L	3138.20	2401.10	170	110
Punjab Natl Bank	3090.90	2770.30	200	100
Monsanto India	73.54	62.27	240	100
Gandhi Spl Tube	15.93	19.43	50	100
Asian Paints	362.36	597.46	175	85
Rallis India	71.29	79.19	160	80
* For nine months ended December 2009 # Special silver jubilee dividend for FY10

India Inc has begun well, with 15 state-owned companies accounting for 74 per cent, or Rs 9,280 crore, of the total dividend paid so far.

Out of the 145 companies that have declared interim dividends, 12 companies had skipped dividends for 2008-09.

Oral and personal care giant Colgate-Palmolive, which reduced its equity capital by one-tenth last year, paid an interim dividend of 2,000 per cent (Rs 20 per share). Among the Tata Group companies, TCS, Tata Investment and Rallis India paid handsome interim dividends.

There are around 400-odd companies from the small- and mid-cap segment which paid dividends for 2008-09 and are likely to increase the payout for 2009-10. That’s because they achieved their earlier full year net profits during the first nine months of the last financial year.

Among the large-cap companies, the dividend payout for 2009-10 could be considerably higher from Indian Oil, Wipro, Hindustan Zinc, Maruti Suzuki, Grasim, Mahindra & Mahindra, Jaiprakash Associates, JSW Steel and Cipla. Among mid-cap companies, higher dividend payout could be expected from Shree Cement, Bhushan Steel, Lupin, Torrent Pharma and Aurobindo Pharma.