Thanks to the turnaround scripted in the third quarter and prospects of more than 30 per cent growth in the fourth quarter, India Inc is likely to dole out hefty dividends for 2009-10.The proof is already in store, with 145 listed companies paying Rs 12,565 crore as interim dividends for the last financial year.
Earlier this week, Hero Honda Motors, the country's largest motorcycle manufacturer, declared a special dividend of 4,000 per cent, or Rs 80, for every equity share with a face value of Rs 2.
Usually, when companies earn handsome profits, they reward their shareholders with dividends. And, if the net profit earned by 100-odd companies during the first nine months of the last financial year is an indicator, investors are in for a good time.
Also, around 100 companies, which did not pay dividends for 2008-09 due to losses, are expected to be back in the list, with a dividend payout of around Rs 6 billion (Rs 600 crore) out of the aggregated net profit of over Rs 23 billion (Rs 2,300 crore) they earned during the first nine months.
For instance, Chennai Petroleum Corporation, which did not declare dividends for 2008-09 on account of losses of Rs 3.97 billion ( Rs 397 crore), is expected to pay dividends this year, as the public sector company reported a net profit of Rs 6.64 billion (Rs 664 crore) for the first nine months. Similarly, JSL, CEAT, Philips Carbon, Apar Industries, Mukand, Shoppers' Stop, Visa Steel and Ramsarup Industries are back in the black.
The corporate sector generally distributes 22-25 per cent of its net profit as dividends to equity shareholders. In 2008-09, despite a double-digit decline in net profit, partly because of mark-to-market losses and the slowdown, 1,223 companies, whose financial year ended in March 2009, paid Rs 540 billion (Rs 54,000 crore) (22.34 per cent of net profit) as dividends. If companies maintain the level of payout for the just-concluded financial year, dividend payments could rise to Rs 600 billion (Rs 60,000 crore).
India Inc has begun well, with 15 state-owned companies accounting for 74 per cent, or Rs 92.8 billion (Rs 9,280 crore), of the total dividend paid so far.
Out of the 145 companies that have declared interim dividends, 12 companies had skipped dividends for 2008-09.
Oral and personal care giant Colgate-Palmolive, which reduced its equity capital by one-tenth last year, paid an interim dividend of 2,000 per cent (Rs 20 per share). Among the Tata Group companies, TCS, Tata Investment and Rallis India paid handsome interim dividends.
There are around 400-odd companies from the small- and mid-cap segment which paid dividends for 2008-09 and are likely to increase the payout for 2009-10. That's because they achieved their earlier full year net profits during the first nine months of the last financial year.
Among the large-cap companies, the dividend payout for 2009-10 could be considerably higher from Indian Oil, Wipro, Hindustan Zinc, Maruti Suzuki, Grasim, Mahindra & Mahindra, Jaiprakash Associates, JSW Steel and Cipla. Among mid-cap companies, higher dividend payout could be expected from Shree Cement, Bhushan Steel, Lupin, Torrent Pharma and Aurobindo Pharma.
