India Inc in a generous mood

Corporate India's payout surged 22 per cent in 2006-07, with more than 50 per cent of the companies raising their dividends. The growth in the largesse comes in the wake of a three-year high, 47 per cent rise in net profits posted by India Inc in the previous financial year.

A total of 650 companies declared dividends of Rs 36,824 crore (Rs 368.24 billion) in FY07, which is 22 per cent more than what they paid (Rs 30,147 crore) in FY06. Buoyed by high profits, some mid- and small-cap firms more than doubled their dividend payout last year.

The 650 companies posted an aggregate 39 per cent rise in net profit at Rs 1,56,963 crore (Rs 1569.63 billion) in FY07 compared with Rs 1,12,741 crore (Rs 1127.41 billion) in FY06.

Of the 650 companies, 360 increased their rate of dividend, while 195 maintained the same level of payout as in the previous year even as 95 others pruned their dividends.

Among the 360 companies that increased their dividends, 54 companies, which had not paid any dividend in FY06, shared profits with their shareholders in FY07 even as 45 companies more than doubled their dividend payout for FY07 from that of the previous year.

Orient Paper, Goodyear, Sandesh, Kirloskar Pneumatic, Mukta Arts, Ahmednagar Forgings and Mangalam Cement announced more than 20 per cent dividend each for FY07 against nil dividend in FY06.

However, the dividend payout ratio (a percentage of net profit declared) declined from 26.74 per cent in FY06 to 23.46 per cent in FY07 mainly because of a one-time hefty dividend payout by Infosys Technologies in FY06 and as a result of big companies such as State Bank of India, GAIL, Bajaj Auto, Union Bank of India, VSNL and Chennai Petroleum declaring the same rate of dividend for FY07.

Hero Honda Motors, Hindalco, Sesa Goa, EID Parry, Novartis, Tube Investments of India and P&G Hygiene cut their dividend payout after reporting low profits in FY07.

NTPC, Indian Oil, Reliance Industries, Hindustan Unilever, SAIL, TCS and ITC declared more than Rs 1,000 crore (Rs 10 billion) dividends each in FY07.

TCS declared a 1,300 per cent (Rs 13 a share of Re 1 each) dividend on the post-bonus capital, which increased two-fold, owing to an issue of bonus shares in the ratio of 1:1.

Infosys Technologies announced a dividend of 230 per cent (Rs 11.50 a share of Rs 5 each) compared with 900 per cent (Rs 45), including 600 per cent (Rs 30) silver jubilee special dividend, paid last year. Wipro, HCL Technologies and Satyam Computer Systems declared the same rate of dividend they had paid in FY06.

Multinational companies GlaxoSmithKline Pharmaceuticals, Nestle India, AstraZeneca Pharma, Aventis Pharma and Siemens also stepped up their dividend payout.

Private sector giant Reliance Industries announced a dividend of 110 per cent compared with 100 per cent paid in the previous year. ITC boosted its dividend to 310 per cent (265 per cent in FY06), Tata Steel raised it to 155 per cent (130 per cent) and ICICI Bank increased it to 100 per cent (85 per cent).

Mid- and small-cap companies such as Bank of Rajasthan, Eicher Motors, Himdari Chemicals, ICI, JK Cement, Adhunik Metaliks and Godavari Fertiliser more than doubled their dividends for FY07.

The refinery sector topped the dividend payout charts, with seven refineries announcing Rs 5,330 crore (Rs 53.30 billion) dividend in FY07 compared with Rs 3,402 crore (Rs 34.02 billion) paid in the previous year. Banks followed with dividends of Rs 4,962 crore (Rs 49.62 billion) {Rs 4,218 crore (Rs 42.18 billion)}, information technology Rs 3,957 crore (Rs 39.57 billion) {Rs 3,785 crore (Rs 37.85 billion)} and the power sector Rs 2,978 crore (Rs 29.78 billion) {Rs 2,602 crore (Rs 26.02 billion)}.