News digest: Shell companies, dividend yield, ITC versus HUL, and more

The CBDT has also written to all principal chief commissioners of income tax, expressing concerns that action against these dormant companies with tax liabilities has been limited

1. Banned shell firms come under tax scanner; CBDT asks govt to give details

Apprehensive that shell companies that have been struck off or are in the process of being so might dodge taxes, the Central Board of Direct Taxes (CBDT) has asked the Ministry of Corporate Affairs (MCA) and registrar of companies (RoCs) to give details relating to them.

It also asked the MCA to keep the tax department posted before striking off any company because the firm could have tax dues.

The tax department said it must have details relating to these companies, including their tax liabilities, by May 31. Read more...

2. Dividend yield hits 10-year low of 1.1%; equity payouts down 3% in 2017-18

Dividends of listed companies which have announced their results are lagging behind the rally in their stock prices in the last one year. As a result, the dividend yield has now hit a 10-year low of 1.1 per cent against 1.44 per cent at the end of 2016-17 and 1.5 per cent two years ago.

This is the first time in the past three years when the dividend payout of listed companies has failed to keep pace with the movement in their share prices. Companies have declared dividend worth Rs 930.6 billion so far with their full-year 2017-18 results, down from Rs 959.4 billion paid by them in 2016-17. Read more...

3. ITC versus Hindustan Unilever: Different tales of their FMCG business

Hindustan Unilever (HUL) raced past ITC on Friday to become India’s largest listed fast moving consumer goods (FMCG) company by market capitalisation. Strong March quarter (Q4) results, robust outlook driven by recovery in rural consumption and the company’s brand reach and leadership are expected to keep the volume momentum strong. In fact, after it results last week, the stock has gained 6  per cent, with market cap around the Rs 3.5 trillion mark

While both companies have significant overlap across FMCG categories, HUL leads ITC both in volume growth and segment leadership. This coupled with higher profitability in the business has helped HUL pip ITC in the market value race. Read more...

4. UltraTech to buy Century Textiles' cement biz through a share-swap deal

Aditya Birla group company UltraTech Cement has said it will acquire the cement business of B K Birla firm Century Textiles through a share-swap deal.

Under the arrangement, Kumar Mangalam Birla-led UltraTech will merge Century Textiles’ 13.4 million cement capacity with itself, taking UltraTech’s capacity to 105.9 million tonnes per annum (mtpa) in the domestic market, and consolidate its leadership position in the Indian cement industry.

After completing the deal, UltraTech will have a total capacity of 109.9 million tonnes (mt) making it the third-largest cement player globally, excluding China. Read more...

5. For Amazon, deal with Flipkart was a non-starter, and how

American e-commerce major Amazon, which reportedly matched rival Walmart’s bid and put in an additional $2 billion as break-up fee in an effort to take Flipkart, may have known quite well the deal was a non-starter, people in the know said. But the Jeff Bezos-led company continued to stay in the game. Sources who described themselves as having “front row seats” during the deal gave a series of behind-the-scenes details to put things in perspective.                

According to one such source, the two key movers at the Seattle-headquartered company watching the Walmart-Flipkart deal, which was announced in the first week of May, were Amazon Chief Executive Officer (CEO) Jeff Bezos and CEO Worldwide Consumer Affairs. Read more...