Tata Sons dividend payout steady for last decade
MUMBAI: One key reason for Cyrus Mistry’s sacking was the displeasure of Tata Trusts in not receiving enough dividends on their shares. On Tuesday, VR Mehta, trustee at the Sir Dorabji Tata Trust, which holds a 27.98% stake in Tata Sons, said as much in an interview to NDTV.
However, a look at Tata Sons’s filings with the Registrar of Companies shows that the firm’s dividend distribution has been steady. It distributed ₹283 crore as dividends to ordinary shareholders in each of the fiscal years from 2008 to 2010. From fiscal 2011 to fiscal 2016, the dividend paid has been ₹323 crore, except for one year. In 2014-15, Tata Sons gave out ₹647 crore to shareholders because of a special dividend received from Tata Consultancy Services Ltd (TCS), where it holds close to 73.5%.
“The trusts were concerned about falling revenue (since Mistry took over)—funds for charitable work were drying up,” Mehta told NDTV. “The trusts are dependent for philanthropic activities on dividends on shares we hold. The performance of Tata Sons was becoming more and more dependent on just 2 companies—TCS & JLR (Jaguar Land Rover).”
Earlier this year, the Trusts withdrew ₹3,951 crore by redeeming preference shares they held in Tata Sons, according to the latter’s directors’ report for 2015-16. These shares were redeemed about 10 years before maturity.
In the four fiscal years from 2013 to 2016, essentially Mistry’s regime, the average dividend received by Tata Sons was ₹6,855 crore, a number boosted by the one-off TCS dividend. Adjusted for that (assuming the same dividend for fiscal 2014 and 2015), the average dividend was ₹5,018 crore. In the four years preceding that, the average dividend received was ₹2,730 crore.
Still, the compounded annual growth rate of dividend received in the Mistry years was 18.1%, a dip from the 21% in the four preceding years when Tata was chairman.
The contention that the group was increasingly dependent on TCS and JLR is true to a certain extent, but it is a matter of degree.
For seven of the nine years for which data is available, dividend from TCS and Tata Motors (consolidated for JLR) accounted for at least 70% of Tata Sons’s income from investments. The two bluechips accounted for as much as 148% of Tata Sons dividend in fiscal 2010. In the last three financial years, it was close to 100% and exceeded 109% in 2013-14.