India Inc paid interim dividend of Rs 2,109 crore in Apr-Aug

Despite declining profits in the first four-and-a-half months of 2009-10, corporates are not shying away from declaring hefty interim dividends. In fact, they have paid Rs 2109 crore in the form of interim dividend during 2009-10 (April-August).

Since the beginning of the year 2009-10, 51 companies informed the stock exchanges that their boards of director decided to declare interim dividends. Some companies went ahead and announced interim dividends, irrespective of profit or losses. On the other hand, during 2008-09 (April-August), the number of companies declared interim dividend was 48, and the amount of dividend was Rs 2,027 crore.

DR Dogra, DMD, CARE Ltd, said, “Prudent cost-cutting measures, positive consumer confidence, wide market reach by companies, lower raw material cost etc. have added to the companies topline as well as bottomline. They have hence declared interim dividends adding to the positive sentiments in the market.?

Among the industries, IT sector paid a robust interim dividend during April-August 2009, followed by cement & products and personal care. On the other hand, during April-August 2008,the highest interim dividend was paid by personal care, followed by cement & products and IT.

The IT sector was at the forefront with as many as six companies declaring interim dividends for the year 2009-10 so far. Four leading companies in IT space-TCS, HCL Technologies, HCL Infosystem and Hexaware Tech – have declared dividends of 30 to 200%.

An analyst from a broking firm also said, ?Reasons for companies to declare interim dividend could be higher amount of cash in the books of the companies, increasing return on equity and lowering debt-equity ratio.?

Among the 56 companies that paid interim dividends for the year 2009-10, 12 companies declared more than 100% interim dividend, 11 between 50-100% and 15 between 25-50%. But in the first four-and-half month of 2009-10, there were 18 companies which declared interim dividend less than 25%.

Among the companies which declared more than 100% dividend during April-August 2009, mention may be made of Colgate Palmolive (600%), Britannia Industries (400%), Crisil ( 250%), TCS (200%), Solvay Pharma (125%) and IMPAL (120%).

Kishore P Ostwal, CMD of CNI Research, said, “Consumer durable and FMCG sectors has performed well, beating the slowdown. Therefore, they rewarded their shareholders by good interim dividend and some PSU also will announce handsome dividend because of cash stripping policy of the government.”

Some other companies which declared lower interim dividends are Natco Pharma (12.5%), Prism Cement (10%), Shivalik Bimetal (10%), Alok Industries (7.5%), Garware Offshore (7%) and Four Soft (5%).

Syndicate Bank, a major public sector bank, also declared 15% interim dividend during the year 2009-10.

Out of 51 companies, seven declared interim dividends more than once. Mention may be made of Crisil, GMM Pfaudler, Godrej Consumer,Colgate Pamolive and Garware Offshore.