Liquidity in mind, fewer cos declare bonus

Written by Pradip Kumar Dey | Mumbai | Updated: Dec 24 2008, 06:43am hrs
The number of companies that declared bonus during 2008 has shrunk when compared to figures from the past four years. During the year, 66 companies declared bonus, as against 83, 80 and 77 companies in 2005, 2006 and 2007 respectively.

DR Dogra, deputy managing director, CARE, said, The performance of companies that are eligible to declare bonuses have not, by and large, deteriorated significantly. But, looking at the general slowdown in domestic as well as global markets, companies are taking all steps to remain in a liquid state by conserving as much cash as possible. The declaration of bonus would certainly put pressure on companies' ability to service in large equity.

Meanwhile, a market analyst said, When the economy is in recession, companies become less confident of their ability to service higher number of equity shares. So they become reluctant to declare bonus issues. This also reflects their nervousness regarding future prospects.

However, despite poor performance, some companies were more liberal in announcing bonus issues in 2008. For example, Westlife Develop declared 79 bonus shares for every share held. Jolly Board, on the other hand, has proposed four bonus shares for every share held. Thirty companies declared 1:1 bonus issues during the year. Veer Energy (9:5) and Bheema Cements (7:4) were the companies that declared the highest number of bonus shares during the year.

Figures from 2007 reveal that 37 companies had declared 1: 1 bonus issues. The highest number of bonus shares was declared by Matra Realty (5:1) and Mediaone Global (5:1).

During 2006 and 2005, the number of companies that declared 1:1 bonus shares was 45 and 32 respectively. The highest number of bonus shares during 2006 and 2005 was declared by Minal Engineering (19:5) and Core Projects (12:1) respectively.

In 2008, there were nine bonus announcements in January, five in February; three companies announced bonus during in March, two in April, five in May, one in June, two in July, five in August, eleven in September, eleven in October, five in November and seven in December. September was the month in which the highest number of companies declared bonuses. JM Financial and Bliss GVS Pharma were among major companies that declared bonuses in September.

JM Financial offered three bonus shares for every two shares held, while Bliss GVS Pharma offered a 3:5 bonus issue.