FMCG major ITC Ltd has announced a “medium term” dividend payout ratio ranging between 80 and 85 per cent of its profit after tax. The policy will be effective FY-20.

This incidentally is the first time that the company has ear-marked a fixed percentage of its profit after tax as dividend pay out ratio.

In an update to its dividend distribution policy, the company on its website mentioned: “...effective financial year 2019-20, in the medium term, the dividend payout ratio is expected to be around 80 to 85 per cent of the profit after tax.”

The update mentions that the Board may declare interim dividend(s) at its discretion.

The reason for ear-marking a fixed dividend pay out ratio is seen as an attempt to “maintain a steady stream of dividend to its shareholders”. Dividend distribution will take into account financial performance, cash flow and liquidity and the distributable surplus available under law.