Reliance Industries to Pay INR 3,401 Crores in Interim Dividend

The largest private conglomerate of India, Reliance Industries announced that it will pay INR3,401 crores in interim dividend to shareholders, which includes promoters as well.

Reliance Industries’ Payout

In a statement to the stock exchange, the MukeshAmbani-led company announced a payout of INR 10.5 per share. This was declared after the board members of the company conducted a meeting on 10th March.

As of 31st December 2015, the company had INR 323.92 crore shares outstanding.

An analyst informed that the amount is more than what the company usually pays to shareholders as a full-year dividend.“The dividend payment exercise was more for the promoters and large individual shareholders to avoid additional liability in this year’s budget”, the analyst added.

This year’s budget has proposed a 10% levy on the yearly dividend incomeifresident investors like promoters and individuals earn more than INR 10 lakhs. This is charged aside from the 20.47% tax that companies in India pay as Dividend Distribution Tax (DDT) ondeclared dividends.

Chairman MukeshAmbani will receive INR 3.79 crores of the total payout of INR 1,514.92 croresto his family. In the past 19 years, it is only the second time that Reliance Industries will pay an interim dividend. In March 2007, the company gave an interim dividend of INR 11 per share.At that time, the company took the decision after the budget increased DDT from 12.5% to 15%.

This year, Reliance Industries has set 18th March as the date when it will confirm the list of investors that hold shares in the company and are eligible to get the dividend payout. It is known as the record date.

Analysts predict that the interim dividend payment will not affect Reliance Industries’ dividend yield.For the last 10instances, shares of the company have been yielding dividend returns between 0.5% and 1.1%. The dividend yield is the total dividend a company pays in the financial year. It is denoted as the percentage of the company’s stock price.

Strategies of Other Companies

On 10th March 2016, 48 companies conducted a meeting to decide on interim dividend payments, one of them being Reliance Industries.

Until 9th March, 275 companies had already announced similar proposals. This will help them avoid paying the extra 10% levy.

Data of Reliance Industries

As per data at the stock exchange, the Ambani family owned 45.99% stake in Reliance Industries as of 31stDecember, last year. MukeshAmbani personally held 0.12% stake. 46.66% stake is held by promoter and promoter group.

Due to a fall in crude oil prices, margins of Reliance Industries’ core refining business reached the peak of the last seven years. As a result, the company set a record with its highest quarterly profit in the period October 2015 to December 2015.

A recent report from Morgan Stanley estimated that the market capitalization of Reliance Industries will double to USD 100 billion in the next 3-4 years from USD 47.97 billion. Downstream projects of the company sharpen its refinery edge. Reliance Industries will emerge as a significant gainer if oil prices increase, itadded.

Summary

Reliance Industries will pay INR 3,401 croresto shareholders and promoters in interim dividend.

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