In dividend largesse, TCS to share ₹12,750 crore with shareholders

Adith Charlie Mumbai | Updated on November 25, 2017 Published on July 21, 2014

Money machine For close to a decade now, TCS has been generating cashfor Tata Sons.

The July-August payout will swell parent Tata Sons’ coffers by ₹9,382 crore

In what could be the highest-ever dividend payout by an Indian company, Tata Consultancy Services will shell out about ₹12,750 crore to its 600,000 shareholders.

Though the move will deplete the cash chest of India’s largest IT company by more than half, the lion’s share of the dividend largesse will go to TCS’ parent, Tata Sons, which will become richer by ₹9,382 crore.

As of June 30, the company had a cash chest of ₹25,900 crore.

TCS Chief Financial Officer Rajesh Gopinathan is not perturbed by this huge payout as the company adds roughly ₹3,000 crore of free cash (after dividend) every quarter. Last week, TCS had announced a dividend of ₹45 per share, which will be paid out in August, said Gopinathan. This includes a special dividend of ₹40 per share on account of the 10{+t}{+h} anniversary of the company going public.

Earlier this month, the company paid out a dividend, announced in June, of ₹20 per share.

“Between July and August, we will have disbursed about ₹12,750 crore as dividend to shareholders and about ₹2,200 as dividend distribution tax. Given our sheer size, I will be surprised if a larger dividend payout has happened in India,” Gopinathan told BusinessLine.

The biggest beneficiary of this move will be Tata Sons, thanks to its 73.69 per cent stake in the country’s largest software exporter.

Funding group firms

For close to a decade now, TCS has been the cash cow for Tata Sons. The Tatas need the funds to retire the high debt on the books of Tata Steel and Tata Motors and to fund the group’s other expansion plans, said a senior analyst tracking the group.

However, lower cash reserves would mean lower ‘other income’ by way of interest for TCS. For the quarter ended June 30, the company generated ‘other income’ of ₹787 crore, going by Indian accounting standards.

Published on July 21, 2014

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