Dividends, share buybacks lift India's top promoters' income in FY22

India’s top promoters and business families saw a big jump in their income from equity dividends and share buybacks in FY22 in line with a sharp jump in corporate earnings.
 

Their income from dividends and share buybacks was up a whopping 50.6 per cent year-on-year in FY22 to around Rs 37,000 crore, as against a 12.6 per cent increase seen in FY21.

In comparison, India’s per capita income is estimated to grow by 16.7 per cent in FY22 after contracting by 4 per cent in FY21. This has widened the income gap between an average Indian household and the country’s top promoters and business families.

The country's top 50 promoter families earned Rs 709.4 crore on average from their companies in FY22, while the median income of these promoters was Rs 123.2 crore in the last fiscal. The promoters’ earnings from dividends and share buybacks is over and above their regular income such as salary, commissions, board sitting fees, bonuses and other perquisites.

The top 50 promoters' average income from dividends and share buybacks in FY22 was nearly 47,300 times higher than India's average per capita income of Rs 1.5 lakh last fiscal. Similarly, these top promoters' median income was nearly 8,200 times that of India's per capita income in FY22.

The top 10 richest promoters reported even faster growth in their income in FY22, which grew 63 per cent year-on-year.

The analysis is based on a common sample of 338 companies, which have so far declared final dividend for FY22. The analysis is restricted to family- and individual-owned companies and excludes public sector companies, listed multinationals, institutions-owned companies and Tata Group firms.

The league table and figures may change as only a third of the top 1000 companies that are part of BSE 500, BSE Mid-cap and BSE Small Cap index have so far declared dividends for FY22.

The biggest earners were the promoters of metals & mining companies but three out of the top five earners were the promoters of technology companies such as Wipro, Infosys, and HCL Technologies who earned the most from their companies by way of equity dividend and share buybacks.

Anil Agarwal family – that owns Vedanta group – leads the league table for FY22 with gross dividend income of Rs 11,677 crore. He is followed by the Shiv Nadar family of HCL Technologies who earned Rs 7,254 crore from the flagship company in FY22 by way of equity dividends.

India's richest family (as also Asia's) – Mukesh Ambani family -- was at third number, with earnings of around Rs 2,657 crore by way of dividend from their flagship Reliance Industries. They are followed by Azim Premji of Wipro who got Rs 2,401 crore as equity dividend from his IT major in FY22.

The five promoters’ families of Infosys are at the fifth spot in the league table with a combined dividend income of Rs 1,709 crore in FY22. Infosys conducted a share buyback programme worth Rs 9,200 crore between June and December 2021, but the company's shareholding pattern suggests that promoter's didn't participate in it.

Other individual promoters or promoter families with big dividend income from their listed companies include Rahul Bajaj family (Rs 1,381 crore), Asian Paints promoters (Rs 967 crore), Harsh Mariwala of Marico (Rs 710 crore), Munjals of Hero Group (Rs 660 crore) and Burmans of Dabur (Rs 619 crore).

The gap between the richest and the average Indian has widened after the Covid-19 pandemic, in which non-profit Oxfam India had suggested that 84 per cent of Indian households suffered a fall in their incomes.

A proxy for this is the per capita net national income which was used for comparing the average Indian's earnings with the abovementioned promoter incomes. It is broadly a measure of the average income of a country’s citizen, including money received from abroad, after deducting the depreciation of fixed assets like machinery. It contracted 4 per cent in 2020-21 following the pandemic. This was the first such contraction since 1955-56. It had been growing at an average of 10.8 per cent in the previous ten years.

The Reserve Bank of India’s 2020-21 annual report noted that output and employment losses in India and globally were unprecedented with a particular impact on the poor.

“The pandemic also turned out to be highly inequitable – it is estimated that around 95 million additional people around the world have been forced into extreme poverty during the year, with 80 million more undernourished, mostly in low-income countries,” it said.

India has historically had issues with inequality. The World Inequality Report 2022, produced by the Paris-based World Inequality Lab, pegged India as a deeply unequal country where the top 10 per cent earns more than 20 times the income of the bottom 50 per cent of the population. This top 10 per cent covers Indian citizens with earnings of Rs 1.17 million. It worsens if one considers the super-rich.