BackReliance Industries to pay Rs3,401 crore in interim dividends
The payout, at Rs10.5 per share, was announced in a statement to exchanges after a board meeting
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Energy giant Reliance Industries Ltd (RIL) said on Thursday that it will pay a total of ₹ 3,140 crore in interim dividend to shareholders, including the promoters.
The payout, at ₹ 10.5 per share, was announced in a statement to the stock exchanges after a meeting of the RIL board. RIL had 323.92 crore shares outstanding as of 31 December.
“The amount is slight higher than the usual, full-year dividend that RIL pays to shareholders. It is significant from that perspective," an analyst with a domestic financial services firm said on condition of anonymity. “The dividend payment exercise was more for the promoters and large individual shareholders to avoid additional liability in this year’s budget."
Finance minister Arun Jaitley’s budget proposed a 10% levy on annual dividend income exceeding ₹ 10 lakh earned by resident investors (individuals as well as promoters). This levy is in addition to the 20.47% tax that Indian companies pay as dividend distribution tax (DDT) on dividends declared.
RIL chairman Mukesh Ambani, in his personal capacity, will get ₹ 3.79 crore of the total payout of ₹ 1,514.92 crore to the Ambani family.
Thursday’s decision is only the second time that RIL has opted to pay an interim dividend in the last 19 years, Bloomberg data show. The company previously paid ₹ 11 per share as interim dividend in March 2007. RIL’s decision then followed a budget announcement raising DDT to 15% from 12.5%, analysts said.
This time, RIL has fixed 18 March as the record date—the date to ascertain investors holding shares in the firm and eligible to receive dividend payout.
Analysts said the interim dividend payment will have little effect on the company’s dividend yield because RIL is not a high-yielding dividend stock
“It may be difficult to calculate dividend yield at the moment. We will have to wait for full-year numbers to get the right idea," an analyst with a foreign bank said on condition of anonymity.
RIL shares have yielded dividend returns in the range of 0.5-1.1% in the previous 10 instances, Bloomberg data show. Dividend yield is dividend paid for the fiscal year expressed as percentage of the firm’s stock price.
Apart from RIL, 47 other companies held board meetings on Thursday? to consider interim dividend payments to shareholders. They include Hero MotoCorp Ltd, Marico Ltd, Divi’s Laboratories Ltd and Bajaj Electricals Ltd.
Hero MotoCorp’s board approved ₹ 40 per share interim dividend and fixed 22 March as the record date, the firm said in a stock exchange announcement.
Marico approved a ₹ 1 per share interim dividend, said the company’s exchange filing.
Divi’s Laboratories approved a ₹ 10 per share interim dividend that will be credited on or before 29 March, the company said.
Mint on 9 March reported that nearly 275 companies had announced such proposals until Wednesday to avoid paying the additional 10% levy as a large number of companies are majority-owned by individual promoters or collectively by their family members, unlike Tata Sons Ltd, ICICI Bank Ltd or Larsen & Toubro Ltd, whose shares are held by holding company and do not fall under the new dividend tax rule, according to analysts.
The Ambani family owned a 45.99% stake in RIL as of 31 December, with Mukesh Ambani holding a 0.12% stake in his personal capacity, stock exchange data showed. Total promoter and promoter group’s ownership in RIL stands at 46.66%, data showed.
The firm reported record quarterly profit for the three months ending December 2015 as margins in its core refining business expanded to the highest in seven years because of a slump in crude oil prices.
US investment banking firm Morgan Stanley, in a 1 March report, said RIL may double its market capitalization to $100 billion in the next 3-4 years from the current $47.97 billion, driven by higher margins from its core business of crude oil refining. It said RIL’s downstream projects increase its refinery edge and would make the company a key gainer if oil prices move up.
Shares of RIL closed at ₹ 1,012, down 2.87% from the previous close. The Sensex fell 0.7% to close at 24,623.34 points.
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