India Inc gifts interim dividends

87 firms declare interim dividends ranging from 5-300%.

India Inc is not shying away from announcing hefty interim dividends despite a slowdown in the growth rate of profits in the quarter ended September 2005. So far, 87 companies have declared interim dividends for 2005-2006, ranging from 5 per cent to 300 per cent.

The aggregate net profit of these companies increased 31 per cent for the quarter ended September 2005, while the corporate sector's net profit on the whole grew by around 17 per cent.

Some companies went ahead and announced interim dividends despite a fall in net profit or losses. The information technology sector was at the forefront with as many as 10 companies declaring interim dividend for the year 2005-06.

Among the 87 companies that paid interim dividends for 2005-2006, 10 declared over 100 per cent interim dividends, 17 between 50-100 per cent and 25 between 25-50 per cent.

"Most of these companies have hefty reserves and they are making the best use of that to reward their shareholders," said an analyst. In seven companies that have declared more than 70 per cent interim dividends, promoters' stakes are more than 60 per cent.

For instance, the promoter's stake in Tata Consultancy Services (TCS), which has declared a second interim dividend of 300 per cent for the year 2005-06 (this has taken the dividend for the year to 600 per cent), is as high as 85 per cent. Similarly, promoters' holdings in both HCL Technologies and Dabur, which have declared an interim dividend of over 100 per cent, are over 70 per cent.

Companies that have declared an interim dividend of over 100 per cent include TCS, Infosys Technologies, Satyam Computer Services, HCL Technologies, Jindal Steel and Power, Dabur, Mercator Lines and Alfa Laval.

Ranbaxy Laboratories, TVS Motor, Elgi Equipment, Ingersoll-Rand, Datamatics Technology and Navneet Publications are among companies that have declared interim dividends between 25-70 per cent despite a drop in net profit during the July-September quarter.

Companies that have announced an interim dividend of over 50 per cent include GlaxoSmithkline Consumers (80 per cent), NMDC (77 per cent), Manugraph Industries (75 per cent), Dwarikesh Sugar (60 per cent) and JB Chemicals (55 per cent).