India Inc Hikes Payouts Despite A Shrunk Net

In a year marked by plunging bottomlines, India Inc has proposed higher dividend to its shareholders for 2001-02.

A study of 411 companies, which have thus far proposed to pay dividends, shows that the payout ratio has increased by 15.7 per cent on the aggregate despite net profit increasing on a lower clip of 11.1 per cent.

This, analysts say, is because companies do not have immediate investment plans and are, therefore, trying to return profits to the shareholders.

The aggregate amount of dividend proposed has increased to Rs 9,442 crore in FY02 from Rs 8,158 crore in FY01, even as the net profit of these companies inched up to Rs 27,231 crore from Rs 24,502 crore in the same period.

 

This indicates that the aggregate payout of these companies was higher at 34.7 per cent in FY02 compared with 33.3 per cent in the previous year.

The good news is that, of the 411 companies, 182 companies (44 per cent) have increased the rate of dividend payouts, while 117 have maintained the dividend at the previous year's level.

Only 96 companies (23.7 per cent) have pruned the rate of dividend for this year, compared to what was paid last year, while the remaining sixteen have proposed to skip dividends.

Telecom major Videsh Sanchar Nigam Ltd (VSNL) was not taken up in this study because it paid a special dividend of Rs 87.50 per share following the government's decision to dip into VSNL's reserves ahead of its divestment.

Software giant Infosys Technologies increased the rate of dividend to Rs 20 per share (Rs 5 paid up) compared with Rs 10 a share in the previous year.

The company paid out of Rs 132.36 crore as dividend for the year ended March 2002, accounting for 16.38 per cent of the company's net profit. In 2000-01, the payout accounted for 10.51 per cent of its net profit.

The hefty profit growth during the year saw motorcycle majors Bajaj Auto and Hero Honda stepping up the rate of dividends. Bajaj Auto declared a 140 per cent dividend, compared with 80 per cent paid in the previous year, while Hero Honda declared a whopping 600 per cent dividend (including special dividend of 250 per cent) against 150 per cent paid during the previous year.

Others which have stepped up dividends for FY02 include Gujarat Gas Company, up from 100 per cent in FY01 to 325 per cent in FY02, HDFC from 125 per cent to 250 per cent, ITC from 100 per cent to 135 per cent, Marico Industries, from 100 per cent to 140 per cent and Munjal Showa from 35 per cent to 75 per cent.

The early trend shows that pharmaceuticals and tea companies have disappointed their shareholders by proposing a lower rate of dividends.

Abbot Labs, which had paid a 20 per cent dividend for FY01, skipped it in FY02. AstraZeneca Pharma reduced its payout from 40 per cent in FY01 to 30 per cent, Knoll Pharma from 450 per cent to 100 per cent, Lupin Labs from 35 per cent to 25 per cent, Parke Davis from 100 per cent to 40 per cent (annualised 60 per cent).

Among tea companies, George Williamson reduced its dividend from 100 per cent to 50 per cent, Jay Shree Tea from 30 per cent to 15 per cent and Tata Tea from 90 per cent to 70 per cent.

The companies which have skipped dividends, according to information available till June 9, include Aarti Drugs, Centak Chemicals, Esab India, Eternit Everest, ITC Hotels, Kinetic Motor, Punjab Chemicals, Safari Industries, Texmaco and TIL.