Payouts pinch India Inc's big guns

Some of the country’s wealthiest businessmen, with the notable exception of the Ambani brothers, saw their dividend income shrink considerably in Globe the last fiscal year, a testament to the economic downturn’s impact on the profitability of some of their companies.

Promoters of seven out of India’s top 10 business houses that together represent revenues worth more than a tenth of India’s national income at around $138 billion saw their combined dividend income slip by 10% for the year to end-March, an ETIG study showed. These companies together have a combined market value of $270 billion or more than 20% of the overall value of firms listed on the Bombay Stock Exchange
.

While Tata Sons, the holding firm for Tata group companies, remained the top dividend earner last year with a Rs 1,650 crore dividend income from all its listed companies, this was 3.3% lower than the previous fiscal year.

However, Mukesh Ambani of Reliance Industries got 11% more as dividend from his $28 billion empire, while his estranged brother Anil, who runs the ADA Group with interests spanning telecom and financial services
, saw his dividend income rise 9%, the ETIG study showed.

London-based British American Tobacco (BAT), which has stakes in cigarette maker VST Industries and diversified consumer goods company ITC, saw its dividend income rise 7%. The Ambani brothers and BAT were the only three promoter groups among the top 10 list to pocket higher dividends last year.

TOP DIVIDEND EARNERS (Rs Crore)
Companies	FY'09	FY'08
Tata Sons	1650	1707
Mukesh Ambani	930	837
Unilever	850	1029
Azim Premji	464	696
BAT	460	430
Nadars	379	480
Anil Agarwal	355	406
Holcim	329	408
KP Singh	299	600
Anil Ambani	254	233
SOURCE: Capitaline, ETIG analysis

The list of top dividend earners do not include old business families such as the Birlas, Mahindras, Bajajs, Kirloskars and Wadias, indicating the changing complexion of India Inc and the growing might of the country's emerging groups.

Dividends are paid out to equity owners from profits earned by a firm. But all profit-making companies do not pay dividends and some may choose to retain it to fund expansion of business. Dividends are typically paid at the end of a financial year, but some fast-growing companies tend to pay interim dividends.

The year saw the top 500 companies lasted on BSE paying 24% more as interim dividends, but their final payout dropped 14%. In contrast, the year ended March 2008 saw them paying 50% less in interim dividends, but the final payout was up by 76%.

Sanjay Hegde, executive director of PricewaterhouseCoopers, says a major factor that led to the fluctuation in interim dividends was a change in government policy on dividend distribution tax. "Profitability, cash flows and economic sentiment also determine the payout," he said.