MUMBAI: Tata Consultancy Services (TCS) will dole out a Rs 5,550-crore dividend, of which more than 70% will go to its largest shareholder Tata Sons.
The dividend income from TCS will add to the kitty of the parent Tata Sons, which is preparing to submit a financial bid for the divestment-bound Air India and building new digital businesses in the wake of coronavirus.
On Monday, TCS, while announcing its fourth quarterly numbers, proposed a final dividend of Rs 15 a share. This, however, will be paid after its shareholders’ approval at the June 10 annual general meeting.
Tata Sons owns 72% of TCS and, accordingly, it will receive Rs 4,000 crore as dividend from the IT services company’s total payout of Rs 5,550 crore.
Though the parent has pledged 0.47% of the TCS stake, it will receive dividend on the pledged stock. The pledgee will get the benefits only if the pledge is invoked, said a legal expert.
TCS is the first blue-chip to announce a dividend payout during its Q4 earnings. It remains to be seen if other companies too would reward shareholders with high dividends or scramble to hoard cash amid rising Covid infections and increasing chances of stricter lockdowns in several parts of the country.
IT companies and FMCG giants are expected to give dividends (since their business has not been hit). But fuel, travel & hospitality and other players will give a very small dividend, or none at all.
A company’s decision to pay a dividend usually depends on its comfort with having sufficient cash flow for other purposes, after the payout. TCS had a free cash flow of Rs 37,968 crore as on March 31.