Top 500 cos raise Rs 20,000-cr debt for dividend payouts in FY'14

May 23 2014, 19:05 IST
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Agency estimates 419 corporates availed Rs 19,180 cr of debt in FY'14 to fund the aggregate dividend payment. Reuters Agency estimates 419 corporates availed Rs 19,180 cr of debt in FY'14 to fund the aggregate dividend payment. Reuters
SummaryAgency estimates 419 cos availed Rs 19,180 cr of debt to fund the aggregate dividend payment.

support revenue and EBITDA profits.

In such cases, a company paying dividend higher than its CFO is likely to tap its cash reserves, investments and non-recurring income.

If this is insufficient, the company would effectively rely on debt to finance dividends. Reliance on cash reserves or debt to partly or fully fund dividend payments has a negative impact on net leverage (adjusted debt net of cash dividend/EBITDA) and the overall credit profile, it added.

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