45 slowdown-hit firms like HCC, Panacea Biotech & others skip dividend payment to stay afloat

MUMBAI: Many Indian companies have skipped paying dividend for the 2011-12 financial year, with the slowing economy causing a strain on earnings and cash flows, prompting them to conserve resources.

Till now 45 companies have conveyed to shareholders their inability to pay dividend, due to losses or lower profits last financial year.

The list includes leading real estate and construction companies such as HCC, Orbit Corp and Ansal Properties. Some of these firms have maintained good track record of dividend payments, until FY11. “More and more companies are likely to skip dividend, to conserve cash in the wake of uncertain growth prospects,” said Indiabulls Securities CEO Divyesh Shah.

Apart from realty and construction, companies from sectors like infrastructure, aviation and manufacturing too have been facing a tough business environment.

They are expected to adopt a conservative approach towards dividend payment, he said. Mumbai-based engineering and construction firm HCC avoided paying dividend after it suffered losses last year.

It had paid 40% dividend in FY11 and 80% each in the previous two years. HCC posted a loss of Rs 222 crore on sales of Rs 3,988 crore in FY12, against a net profit of Rs 71 crore on a turnover of Rs 4,091 crore in FY11. Usha Martin is another large company to have skipped dividend payout in FY12 due to losses.

It had paid 100% dividend consistently for the previous four years. The company posted a loss of Rs 33 crore on sales of Rs 2,837 crore in FY12, compared with a net profit of Rs 100 crore on sales of Rs 2,534 crore in the previous year.

Rajshree Sugars and Panacea Biotech, too, recorded losses in the past fiscal, and avoided paying dividend this year. A few others like Surya Roshni, Consolidated Construction and Ansal Properties switched to a conservative dividend strategy after recording a dip in profit.



Gaurav Dua, head of research at brokerage firm Sharekhan, said dividend payment is never a priority for many companies, and their dividend policies depend on cash flows and debt-equity ratio.