Chennai: Mindtree, with its recent announcement on dividends might have made its takeover by engineering major L&T costlier still, as per share now totals up to Rs 27.
The Bengaluru-based software firm’s board on Wednesday proposed to pay a special dividend to its shareholders, including promoters, that along with regualr dividend and tax components would strip the mid-sized IT firm of about Rs 530 crore.
Reports also state that the recent move by the firm is one of many attempts that might happen in coming months to ward off L&T’s attempts.
The company declared an interim dividend of Rs 3 per share that will be paid before 10 May and also pay Rs 4 a share in final dividend, besides Rs 20 in special dividend, a proposal subject to shareholders’ nod at the firm’s annual general meeting (AGM) in June or July.
The move may push up the acquisition cost for the engineering major and will result in an outgo of around Rs 530 crore, including dividend distribution tax (DDT), from the company’s kitty. The cash reserves stand at around Rs 1,100 crore by end of March.
The dividends have been declared to commemorate completion of 20 years of the company’s operations apart from crossing the $1 billion revenue milestone in the last financial year, the IT services company said.
“Given the company has about 16 crore shares, the special dividend at Rs 20 a share alone will translate to a cash payout of about Rs 320 crore. Along with interim and final dividends, besides tax components, the total payout will swell to about Rs 530 crore,” CEO and MD, Mindtree Ltd, Rostow Ravanan said after announcing the Q4 results of the company.
The firm on Wednesday reported an 8.9 per cent growth in consolidated net profit at Rs 198.4 crore for the March quarter. Mindtree’s FY19 net profit grew 32.2 per cent to Rs 754.1 crore, while revenue was up 28.5 per cent to Rs 7,021.5 crore from the previous fiscal.
Last month, Larsen and Toubro (L&T) had acquired Cafe Coffee Day owner V G Siddhartha’s 20.32 per cent stake in Mindtree, and placed an order with brokers to pick up another 15 per cent shares from the open market. According to reports, by June or July, L&T could hold significant stake in the city-based company.
The move triggered an open offer under which the infrastructure major will acquire an additional 31 per cent stake at Rs 980 a share. The open offer is slated to begin on 14 May and close on 27 May.
Ravanan said the company upholds the standards of governance and the recommendation of special dividend was made by the board in keeping with the practised norms of the firm.
However, the shareholders will have the ultimate say by using their votes in favour or against the board’s recommendation in June-July after L&T’s open offer ends on 27 May, he added.
“The special dividend is to commemorate and celebrate Mindtree’s achievements and the special dividend is anyway subject to shareholders’ approval at the forthcoming AGM,” he said and added the dividend was extremely equitable.
| ‘NO IDEA’ |
| Ravanan said the announcement was not meant to either benefit or hurt the interests of any of the shareholders. However, the company would not be in a position to know the objections raised by the shareholders until the annual general meeting takes place, he added.
“I have absolutely no idea. When the AGM is held, all shareholders will get a chance to vote. But given the fact that it is an important milestone in the life of the company, and that it is in line with our policy of being shareholder-friendly and returning excess cash back to shareholders, this is absolutely in line with capital allocation policy,” he said. |