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Q.

Looks like 50% dividend has become the benchmark for distribution of profits by the Indian companies. Even managements that were once reluctant to share their gains with the shareholders have become more liberal with regard to their distribution of dividends. What made this change in the attitude of many conservative managements? Your views?

Asked by Good Citizen, 02 Aug '10 12:14 pm
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Answers (2)

 
1.

Raising working Capital has become dear with banks due to formalities and interest rates ,Capital Markets has become an easy alternative . Expansion and project managements are increasing day by day and in the climate of competitive business environment companies find easy options with raising funds from the public directly . This is possible only through estabilishment of good investor relationship ,by dolling out Sizable dividends to their stock holders companies create a trace record of payouts to facilitate easy capital formation through public issues . They are still conservative with issue of Bonus shares which will dilute their hold , Dividend pay out is very viable and profitable alternative to bolster the investers interest in corporates , nowadays.
Answered by venkatesaldevarajan, 02 Aug '10 12:44 pm

 
  
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2.

Indian companies are very stingy when it comes to payment of dividends. If the earning per share of Rs.10 is 50 even then they declare only 50 per cent dividend. Foreign companies declare more dividends because majority of shares is held by foreigners and they repatriate larger share of profit every year.
Answered by mandook, 02 Aug '10 09:24 pm

 
  
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