ITC fixes dividend payout for shareholders at 80-85% of profit after tax

ITC has decided to offer 80-85 per cent of its profit after tax (PAT) as dividend to its shareholders, which will be effective from the current financial year. This would be applicable in the medium term.
 
According to a company notice on updated dividend distribution policy available on its website, the board may declare interim dividend at its discretion. The final dividend may include special dividend as recommended by the board.
 
The new policy can be amended and reviewed as and when required by the board.
 
However, over the past 10 years, ITC usually hasn’t been paying interim dividend but only final ones and paid special dividend only on two occasions — in June 2011 and May 2016.
 
The note stated that the company’s financial performance, cash flow and the liquidity position were being considered for payment of dividend. It will also take into account the need to retain earnings, meet foreseeable funding requirements, including organic and inorganic growth plans, and market conditions.
 
The company’s financial capacity to address any contingencies is also a consideration while declaring surplus cash as dividend.
 
“Dividend distribution will also cognize on foreseeable opportunities and threats in the globalised competitive context,” said the company in the note.
 
Sources said the call has been taken as most of the capital expenses have been undertaken and are underway in its hotels and food processing segments.
 
As a result, the company now need not undertake heavy capex. So, the profit can be largely distributed among shareholders.
 
Over the years, ITC expanded its footprint in the hotels industry through more than 100 properties in over 70 destinations in the country. Of these, 14 are part of ITC Hotels Luxury Collection, and 16 are WelcomHotel properties. These are a mix of owned and managed properties.
 
Earlier, company executive director Nakul Anand had stated that ITC is looking at expanding the WelcomHotel brand, and will soon add about 15 more properties under this umbrella.
 
Apart from this, the company also invested heavily in setting up 20 Integrated Consumer Goods Manufacturing and Logistics (ICML) facilities that will aid the company with economies of scale, freshness and close-to-market distribution.
 
In the last financial year, the manufacturing capability of ICML Trichy was augmented with the commissioning of the state-of-the-art lines for finger snacks, atta and biscuits while the capacity utilisation levels in Kapurthala, Panchla, Uluberia, Mysuru and Guwahati were being progressively ramped up.
 
Sources said another 8-9 such ICMLs, where investments are being made, is expected to be commissioned in the near term.