Cos declare dividends despite dipping profits

Written by Pradip Kumar Dey | Mumbai | Updated: Jan 9 2009, 03:44am hrs
Corporates declared hefty interim dividends during 2008-09 (April-December), despite a decline in profits in the first six months of the year. They paid Rs 8,332 crore by way of interim dividend during the period, which is around 14% of the total dividend paid by them during 2007-08. In the year 2007-08, the corporate sector paid Rs 59,975 crore as dividend.

Since the beginning of 2008-09, 112 companies informed the stock exchanges that their board of directors had decided to declare interim dividends. Some companies went ahead and announced interim dividends despite a fall in net profit or losses. The IT sector was at the forefront, with as many as fourteen companies declaring interim dividend for the year 2008-09. Four leading companies in the IT space--TCS, HCL Technologies, HCL Infosystems and Infosys Technologies--declared interim dividend of 100-300%.

An analyst from a broking firm said, "The declaration of interim dividend in the present scenario could be a result of higher amount of cash in the books of companies, increasing return on equity and lowering debt equity ratio."

Among the 112 companies that paid interim dividends in year 2008-09, 26 companies declared more than 100% interim dividend; the dividend of 14 companies ranged 50-100% and 32 companies ranged 25-50%.

During the first nine months of 2007-08, in comparison, there were 201 companies that declared interim dividend.

Among the companies which declared more than 100% dividend during April-December 2008 , mention may be made of Monsanto India (1800%), Colgate Palmolive (900%), Amrutanjan Health (400%), Hind Unilever ( 350%), TCS (300%). Some companies which declared low interim dividend are Shivalik Bimetal (12.5%), Aries Agro (12%), Mayur Leather (8%), Jaiprakash Hydro (7.5%), Temptation Foods (6%).

ONGC, second highest company in terms of market capitalization, declared 180% interim dividend during the year 2008-09.

Out of the 112 companies, 25 declared interim dividend more than once. Infosys Technologies, GMM Pfaudler, HCL Technologies, HCL Infosystems, Crisil, and Crompton Greaves were among such companies.

Purse strings

112 companies paid Rs 8,332 cr as interim dividend during April-Dec 08

In comparison, 201 companies had declared interim dividend in 2007-08

As many as 14 IT cos declared interim dividend during the period

TCS, HCL Tech, HCL Info and Infosys Tech declared dividend ranging100-300%