24 companies out of the total universe of listed entities have proposed dividends for FY25 despite making losses in the fiscal on a standalone basis.

Businessline analysis of the FY25 results of listed enterprises from Capitaline showed that EID Parry, Edelweiss Financial Services, Shipping Land, AB Real Estate, S H Kelkar & Co, Majestic Auto, lL&FS Investment Managers, Manali Petrochemicals, and KCP are among the 24 companies that made losses on a standalone basis in the fiscal and have proposed to pay dividends, subject to shareholder approval in the AGM.

In 5 out of of these 24 instances, the companies have also made losses on a consolidated basis. In 9 instances, the companies are profitable on a consolidated basis and in 10 others, consolidated statements are not applicable for the entities.

To be sure, the Companies Act does not prohibit the payment of dividends in case of losses and the relevant Section 123 notes that dividends can be paid from the profits of the current year or the accumulated profits of previous years. In case of a loss in the current year, the proposed dividends can only be paid out of free reserves based on standalone financials.

“No dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year arrived at after providing for depreciation...or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation,” the section reads.

EID Parry, for instance, posted a standalone loss of ₹428 crore in FY25, but on a consolidated basis has a profit of ₹1,772 crore. The company has proposed a dividend of ₹9 per share. For Edelweiss Financial Services, the consolidated profits stand at ₹535 crore (against a standalone loss of ₹52 crore) and divided is ₹1.5 per share. Majestic Auto, which has the third-largest dividend percentage among the 24 companies, has made a standalone loss of ₹3 crore, against consolidated PAT of ₹9 crore.

AB Real Estate, Indoco Remedies, HB Stockholdings, Texmaco Infrastructure, and Alphageo are among those who have proposed a dividend despite net losses across both standalone and consolidated terms, data from Capitaline showed.

“One of the most fundamental reasons a company would declare dividends even in the year of losses is to showcase its financial stability and build investor confidence...From a legal perspective, the declaration of such dividend is permissible as per the Companies Act, 2013 subject to adherence of certain conditions. From a governance perspective, the company should clearly disclose its rationale for declaration of dividends resulting in complete transparency,” Prasenjit Sarkar, Partner, Grant Thornton Bharat, said.

“Broadly speaking, Section 123 of the Companies Act provides that dividends can be paid only from the profits of the current year or the accumulated profits of previous years,” Naveen Vyas, Senior Vice-President, Anand Rathi Global Finance, said.

“The core purpose is to compensate promoters and shareholders with a dividend despite the standalone businesses failing to generate profits in the current year. This is also expected to help maintain a positive outlook on the company’s stock price,” he added.

Across the 24 companies, data from Capitaline showed that promoter shareholding ranges from 32-87 per cent.

Published on June 13, 2025