Lakme Dividend Likely To Top 1,000%

Tata major Lakme is expected to announce an all-time high, hefty cash dividend to its shareholders to compensate them for the loss of the main cosmetic business which was sold off to Hindustan Lever(HLL).

Marketmen, quoting sources in the company, said Lakmes dividend this year is likely to top 1,000 per cent or Rs 100 per share. They have received nearly Rs 200 crore from Hindustan Lever for the sale of the business and the plants, they will use the money to reward shareholders, said sources.

A well-placed Lakme executive declined to comment. Wait till the announcement is made. We cant comment now, he added.

Lakme shareholders have been left holding shares of a shell company following the sale of the main cosmetic business in February. The popular Lakme trademarks and the two manufacturing plants were sold to Hindustan Lever. While the sale of brands fetched Rs 200 crore, the valuation of the two plants has not yet been disclosed. Lakme had appointed independent valuers to suggest an appropriate price for the plants.

Another source, a long-time Lakme shareholder, said the companys dividend will be much higher at 1,800 per cent or Rs 180 per share.

The source added that the Lakme board is meeting in the first week of April to discuss the issue, plus Lakmes future plans, though this could not be confirmed by Business Standard with Lakme sources. A pay-out of 1,000 per cent would cost Rs 160 crore. Lakme has enough cash in its kitty from previous disposals.

A 1,000 per cent pay-out will be one of the highest in Indian corporate history. Last year, Lakme paid a dividend of 50 per cent on an expanded equity.

After the disposal, Lakme was questioned by shareholders who said they woke up one morning to find they hold shares in a shell company. Even the financial institutions, who hold a small stake in Lakme are believed to be opposing the sale.

One of the options being considered by the senior Tata management is to merge Lakme with another group company, Indian Hotels.

Another plan is use the funds leftover after the dividend pay-out to diversify into the retail stores business.