As many as 88 listed companies can pay dividends worth Rs 27,600 crore but many continue to hold cash stockpile, according to proxy advisory firm IiAS.

This is higher than the amount of Rs 213 billion (Rs 21,300 crore) IiAS identified in its 2016 study (based on FY15 financials).

Based on an analysis of the financials of S&P BSE 500 firms for the fiscal 2016, the report said 88 companies paid Rs 278 billion (Rs 27,800 crore) as aggregate dividend in FY 2015-16 and can additionally pay Rs 276 billion (Rs 27,600 crore).

“We believe SEBI’s requirement of an articulated dividend policy will force companies to think more deeply about dividend payouts,” the advisory said. “Companies are clearly continuing to hold cash stockpiles and must consider paying higher dividends.”

The study concluded that seven companies – MRF Ltd, Eicher Motors Ltd, 3M India Ltd, Bosch Ltd, Maruti Suzuki India Ltd, ISGEC Heavy Engineering Ltd and Honeywell Automation India Ltd - can pay dividends of over Rs 100 per share. Ten companies can pay dividend between Rs 50 and Rs 100 per share.

Despite being profitable, Whirlpool of India Ltd (Whirlpool) has not paid dividend in the past four years. IiAS estimates that Whirlpool has Rs 240 crore in excess distributable cash.

Onmobile Global, Thomas Cook (India), Swan Energy, Titagarh Wagons and Akzo Nobel India had the highest dividend payout ratios in FY16, ranging from 340 per cent to to 195 per cent of the companies’ profit after tax.

“Following our continued push on dividend payouts,” IiAS noted, “In July 2016, SEBI made it mandatory for the top 500 listed companies to formulate and disclose a ‘dividend distribution policy’. The policy requires companies to disclose, among other points, the circumstances under which the shareholders may or may not expect a dividend and a policy outlining how the retained earnings will be utilised. While IiAS had advocated a ‘retention policy’ in its previous dividend report, SEBI’s dividend policy defines a similar framework. The regulation stops short of mandating a target payout ratio, however, we believe it strikes the right balance between ensuring predictability of returns for shareholders and allowing flexibility of investment plans for companies.”

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