Black magic specialist in Canada (Kala ilam specialist in UK) Bangali Amil ba...
Ā
Dividend Decisions By Reliance Industries
1.
2. As the trend is given there, 100% of the face value had been declared as dividend in 2005-06( previous to this, in 2004-05 that was 75% i.e. Rs. 7.5/.share) and then RIL is declaring more dividends in the further years, like 110%, 130% for two years.
3.
4. Earning per share of three years, i.e. 2006,07,08 are increasing from Rs. 63 to Rs. 131 and in response to this company had given dividend @ 100%, 110% & 130%, at increasing rates. This shows that company is giving much return to their shareholders as their part of profits.
5. But if we take a look at the Earning Per Share of 2009 i.e. Rs. 95, which is less than the previous yearās EPS and the company had not increased its dividend as it was doing from last 3 years, but still they maintained to gave them the same dividend as to the related previous year i.e. 130%. That may be some tactics to meet the expected demands of the shareholders that is the dividend paid by RIL in related previous year i.e. 130%.
6.
7. Following are some of RILās expansion plans which was also assisted with such internal finance (retained earnings)-
8. In 2004-05, RIL acquired the polyester major, Trevira GMBH, headquartered in Frankfurt, Germany which has the capacity of 130,000 tonnes per annum of polyester staple fibers, polyester filament yarns and polyester chips.
9. In the year 2006, the company set up a new export-oriented refinery through its subsidiary, Reliance Petroleum Limited (RPL). Ā
10. Ā In the year 2007, Indian Petrochemicals Corporation Limited (IPCL) merged with the RIL. Also, Reliance Retail entered the organized retail market in India with the launch of its convenience store format under the brand name of 'Reliance Fresh'.
11. During the year 2007, the company commissioned their largest expansion project. The company expanded its polypropylene (PP) capacity by 280 KTA at Jamnagar that increased the combined capacity to 1,710 KTA. Ā
12.
13. Reliance Industries is declaring just 70 % of their profits as dividends for this year, which is almost half of the previous dividend of 2008-09, that was 130%. Companyās declaration is not according to the marketsā sentiments but still the share price of RIL have not any downside on its share prices that mayb be due to their good profits which is giving an indication of further investment by the company as they are retaining 93 % for their reserves.
14.
15. Liquidity of RILās shares in the market increases.
16. This issue also reduces the Earnings per share, Book Value and other per share values.
17. As we have seen in above graph, the market price gets adjusted on issue of bonus shares.All the above explanations, relations and dependency of one aspect on other states that market price depends upon many aspects like dividend, retention ratio, company previous performance, expansion prospects, growth opportunities, prospects of shareholders, intention of the company with their dividend declaration policies. <br />