DIVIDEND DISTRIBUTION POLICY
The Board of Directors (the “Board”) of ESAB India Limited (the “Company”) has adopted the following policy and procedures (“Policy”) with regard to Distribution of Dividend.
The Policy is in conformance with the requirements of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016 (SEBI LODR Regulations). The Company is required to disclose the Policy on distribution of dividend, each year in its annual report as well as in its website.
The purpose of this policy is to facilitate the process of dividend recommendation or declaration and its pay-out by the Company which would ensure a regular dividend income for the shareholders and long term capital appreciation for all stakeholders of the Company.
Dividend is the payment made by a Company to its shareholders, usually in the form of distribution of its profits. The profits earned by the Company can either be retained in business or used for acquisitions, expansion or diversification, or it can be distributed to the shareholders. The Company may choose to retain a part of its profits and distribute the balance among its shareholders as dividend.
The Company would ensure to strike the right balance between the quantum of dividend paid and amount of profits retained in the business. The Board will refer to the Policy while declaring / recommending dividends on behalf of the Company.
This Policy has been adopted by the Board of the Company at its meeting held on 6 February, 2020. The policy shall also be displayed in the Annual Report and also on the website of the Company.
Circumstances under which shareholders can expect Dividend
Companies will follow dividend policy where dividends are considered only if earnings are greater than what is needed to finance for capital budgeting needs as projected in the annual operating plan for each year.
The Board may declare one or more interim Dividends during the year. Additionally, the Board may recommend Final Dividend for the approval of the shareholders at the Annual General Meeting.
The Dividend for any financial year shall normally be paid :
- Out of the Company’s profits for that year (arrived at after providing for depreciation in accordance with law and transferring such amount to reserves as may be prescribed or as may be considered appropriate by the Board of Directors of the Company); and / or
- Out of the accumulated profits of any previous financial year(s) in accordance with the provisions of the Act and Regulations, as applicable.
The Company has currently issued only the equity shares.
Financial parameters and other internal and external factors that would be considered for declaration of dividend
The Board will take into consideration various parameters as mentioned below before arriving at a decision on declaration of dividend.
- Current year’s profit / inadequacy of profit
- Accumulated reserves
- Distributable surplus available as per the various Acts and Regulations
- Investment opportunities – for expansion and diversification, new projects, acquisitions and / or any other potential strategic actions;
- The Company’s liquidity position and future cash flow needs
- Track record of dividends distributed by the Company
- Capital expenditure requirements considering the expansion and acquisition opportunities
- Cost and availability of alternative sources of financing.
- Funds requirements for meeting any contingencies and unforeseen events with financial implications
- Capital market scenario
- Shareholders expectations
- State of the economy and nature of industry
- Macro-economic conditions in general
- Stipulations / covenants of loan agreement, if any
- Prevailing taxation policy or any amendments expected thereof, with respect to dividend distribution
- Consistency in Payout ratios
- Any other relevant factors that the Board may deem it fit to consider before declaring Dividend.
The Company is consistently rewarding its shareholders with continuous dividend pay-out over the last several years and will continue to maintain the same, subject to other constrains as enumerated in this policy.
Utilization of retained earnings
The Company shall maintain the retained earnings sufficient to address the financing of working capital, capital expenditure, other corporate actions, generating higher returns for shareholders through reinvestment of profits for future growth and expansion and other such specific purposes duly approved by the Board of Directors. The Company shall endeavor to utilize the retained earnings in a manner that shall be beneficial to both, the interests of the Company and its stakeholders.
Conflict of Policy
In the event of a conflict between this policy and the existing statutory regulations, the statutory regulations will prevail.
Modification of the Policy
The Board of Directors of the Company may subject to applicable laws amend, suspend or rescind this Policy at any time. Any difficulties or ambiguities in this Policy will be resolved by the Board of Directors / Administrative Committee, in line with the broad intent of this Policy.
Disclosure of Policy and Disclaimer
The Dividend Distribution Policy of the Company shall be disclosed in the Annual Report of the Company and placed on the Company’s website www.esabindia.com
The Policy shall not be construed as a solicitation for investments in the Company’s securities and shall neither act as an assurance of guaranteed returns (in any form), on investments in the Company’s securities.