dividend policy decision
TRANSCRIPT
-
8/14/2019 DIVIDEND POLICY DECISION
1/37
Presented by: Group 4Atreyee Nandy, J. Mrudula, Paul Dhinakaran, Priya
Bhutada,Rohan Phillip Mathew, Srikanth Srinivasan, Vineeth
Gangadharan
DIVIDEND POLICY DECISION
-
8/14/2019 DIVIDEND POLICY DECISION
2/37
MEANING OF DIVIDENDPOLICY
-
8/14/2019 DIVIDEND POLICY DECISION
3/37
INTRODUCTION
3 SCHOOLS OF THOUGHTPERTAINING
TO DIVIDEND
Dividend irrelevance theory
Dividends are undesirable
Dividends are good for the company
-
8/14/2019 DIVIDEND POLICY DECISION
4/37
MEASURES OF DIVIDENDPOLICY Dividend yield
Dividend payout ratio
-
8/14/2019 DIVIDEND POLICY DECISION
5/37
FEATURES OF DIVIDEND
Dividends Tend To Follow Earnings Dividends Are Sticky Dividends Follow a Smoother Path
than EarningsA Firms Dividend Policy Tends To
Follow The Life Cycle Of The Firm
-
8/14/2019 DIVIDEND POLICY DECISION
6/37
Company Analysis
Dr. Reddys Lab
Suzlon Energy
Hero Honda
-
8/14/2019 DIVIDEND POLICY DECISION
7/37
Dr. Reddys Lab
Company Overview
Five Year Analysis ( 2005 2009)
Criteria for the Analysis
-
8/14/2019 DIVIDEND POLICY DECISION
8/37
Year End Dividend(%)
Dividendpayoutratio
RetainedEarnings
(%)
DividendPer
Share(Rs.)
EarningPer Share
(Rs.)
Mar '05 100 0.584479 0.415521 5 8.55
Mar '06 100 0.18165 0.81835 5 27.53
Mar '07 75 0.053507 0.946493 3.75 70.09
Mar '08 75 0.132696 0.867304 3.75 28.26
Mar '09 125 0.187734 0.812266 6.25 33.29
-
8/14/2019 DIVIDEND POLICY DECISION
9/37
DIVIDEND PAYOUT (%)
-
8/14/2019 DIVIDEND POLICY DECISION
10/37
LIFE CYCLE ANALYSIS OF DIVIDEND POLICY
-
8/14/2019 DIVIDEND POLICY DECISION
11/37
2005
Dividend Percentage: 100
Dividend Payout Ratio: 58.45%
Retained Ratio: 41.55%
EPS: Rs.8.55
Dividend (per share): Rs.5
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
12/37
Share Prices Before & After Dividend Announcements( 2005)
-
8/14/2019 DIVIDEND POLICY DECISION
13/37
2006
Dividend Percentage: 100
Dividend Payout Ratio: 18.17%
Retained Ratio: 81.83%
EPS: Rs.27.53
Dividend (per share): Rs.5
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
14/37
Share Prices Before & After Dividend Announcements ( 2006)
-
8/14/2019 DIVIDEND POLICY DECISION
15/37
2006
Nov, 2005 Acquisition of Roches API, For US $61 million.
Acquisition of Betapharm, the fourth-largest genericpharmaceutical company in Germany.
A deal worth Rs. 2250 crore
Funding of Acquisition:
Internal funds
Rs. 886.6 crore (39.4%) External Sources
Debt from financial institutions
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
16/37
2007
Dividend Percentage: 75
Dividend Payout Ratio: 5.35%
Retained Ratio: 94.65%
EPS: Rs.70.09
Dividend(per share): Rs.3.75
-
8/14/2019 DIVIDEND POLICY DECISION
17/37
Share Prices Before & After Dividend Announcements ( 2007)
-
8/14/2019 DIVIDEND POLICY DECISION
18/37
2007
Repayment of the debt raised forBetapharm funding
R&D budget increased to 7%
Market Expansion
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
19/37
2008
Dividend Percentage: 75
Dividend Payout Ratio: 13.27%
Retained Ratio: 86.73%
EPS: Rs.28.26
Dividend (per share): Rs.3.75
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
20/37
Share Prices Before & After Dividend Announcements ( 2008)
-
8/14/2019 DIVIDEND POLICY DECISION
21/37
2008
40% dip in net profits and turnover ofthe company
Plans to invest significantly in biologicsand global generics
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
22/37
Net Profit
-
8/14/2019 DIVIDEND POLICY DECISION
23/37
2009
Dividend Percentage: 100
Dividend Payout Ratio: 18.77%
Retained Ratio: 81.23%
EPS: Rs.33.29
Dividend (per share): Rs.6.25
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
24/37
Share Prices Before & After Dividend Announcements (2009)
-
8/14/2019 DIVIDEND POLICY DECISION
25/37
2009
Use of internal cash reserves for acquisition
DowPharmas Small Molecules facilities in theUK
BASF Corporations manufacturing facility atShreveport in Louisiana, USA
Jet Generici SRL
Golden Jubilee Year-substantial increase inprofits
DIVIDEND TRENDS
-
8/14/2019 DIVIDEND POLICY DECISION
26/37
> Largest Wind Power and Wind Turbinemanufacturing Company in Asia (Fifth largestin the world)
> 12.3% share in the global 120 GW capacity
> Actively run by the Chairman and Managing
Director, Mr. Tulsi Tanti
-
8/14/2019 DIVIDEND POLICY DECISION
27/37
PERFORMANCE HIGHLIGHTS
PERFORMANCE HIGHLIGHTSIn Crores
-
8/14/2019 DIVIDEND POLICY DECISION
28/37
PAT v/s. DividendsDeclared
-
8/14/2019 DIVIDEND POLICY DECISION
29/37
Highlights of 2008-09
An year of high Investments
Increase in Loan funds , Financial Charges and Exceptional Expense Items
Resulting in a net Loss of Rs. Rs. 469.27 Cr.
The Management for the next year, has decided to use funds forDebt repayment and improving Working Capital position.
Dividends Declared: Nil
-
8/14/2019 DIVIDEND POLICY DECISION
30/37
> Increase in Financial Charges
Total Loans borrowed increased from 3084.74 Crs to 7329.48 Crs
- Increase in Financial charge from Rs. 596.94 Crs to Rs. 1053.94 Crs
Loan Type 2008-09 2007-08
12.5% secured redeemable
non-convertible debentures
300.00 -
Term Loans 579.94 22.06
Working capital Loans 3126.29 650.20
Zero Coupon convertible
Bonds
2535.50 2005.50
Other Short Term Loans 787.75 406.98
TOTAL 7329.48 3084.74
-
8/14/2019 DIVIDEND POLICY DECISION
31/37
> Exceptional itemsExceptional items increased to Rs 873.16 cr from Rs 285.21 cr.
Reasons:
Foreign exchange losses of Rs 131.35 cr. due to restatement ofzero coupon convertible bonds.
Provision for blade replacement cost aggregating Rs 221.59 cr. FromRs 121.71 cr. and consequential generation costs of Rs 189.51 cr.
Mark-to-market losses of Rs 330.71 crore from Rs 23 cr. in 07-08 inrespect of foreign exchange forward / option contracts.
-
8/14/2019 DIVIDEND POLICY DECISION
32/37
Investments
Completed acquisition of 91% stake in RE Power
Belgium based Hansey Transmission operationscommensed
SE forge;
Current Scenario
Q1 Loss: 462 cr
Stock Price corrected by 70% over the past 3 months
To raise 5000cr GDR,FCCB in Lux SE Rs. 970 Cr. CAPEX Plans
-
8/14/2019 DIVIDEND POLICY DECISION
33/37
Stock Volatility
-
8/14/2019 DIVIDEND POLICY DECISION
34/37
DIVIDEND POLICY
-
8/14/2019 DIVIDEND POLICY DECISION
35/37
An introduction
The company policy
The dividends declared
-
8/14/2019 DIVIDEND POLICY DECISION
36/37
Their dividend policy over the years:
2000 2001(150%)
2001 2002 (850%) 2002 2003 (900%)
2003 2004 (1000%)
2004 2005 (1000%) 2005 2006 (1000%)
2006 2007 (850%)
2007 2008 (950%)
2008 2009 (1000%)
-
8/14/2019 DIVIDEND POLICY DECISION
37/37
THANK YOU!