Four Soft declares Rs 29 per share special dividend for its retail investors

MUMBAI: While many retail investors have burnt their fingers with their risky bets at the small-cap counters, nearly 20,000 investors of Four Soft, a Hyderabad-based software solutions firm, are poised to reap a windfall in the form of a one-time dividend.

The software firm has decided to return part of the money it received from selling its overseas business to its shareholders, and it declared a special dividend of Rs 29 per share and fixed October 18, 2013, as the record date for the payment of the interim dividend. The dividend will be paid on or after October 22, the company said in a filing to the stock exchanges.

Shares of Four Soft, which had surged over 167 per cent in the last three months, were locked at the upper circuit of 5 per cent at Rs 39.20 on Monday. Investors rushed to buy the stock as ex-dividend, the cost of acquisition at Monday’s closing price, would be just Rs 10.20 a share.

Founded in 1999, Four Soft has ten global offices, eight development centres and an employee strength of over 550. It has 20,510 shareholders, including 19,948 retail investors. As of June 30, the promoters had a 23.95 per cent stake in the company, according to the BSE website. Four Soft, promoted by Palem Srikanth Reddy, a provider of IT solutions to logistics and transportation industries, sold its IT solutions business and its stake in all its foreign subsidiaries to the UK-based Kewill group - which together contributed nearly 80 per cent to the company’s consolidated revenue - for $43.4 million a few months ago.

According to the company, the transaction for the business is valued at $22.5 million and investments in the share capital of foreign subsidiaries are valued at $20.9 million, making a total deal value of $43.4 million. For the quarter ended June 30, the company registered a turnover of Rs 30 crore against Rs 32 crore in the same period last year. It made a net profit of Rs 4 crore (Rs 2.76 crore).

For the full year 2012-13, the company posted a net profit of Rs 11 crore on a turnover of Rs 132 crore. In the past, a few Indian companies rewarded shareholders following the sale of assets.