ONGC DIVIDEND POLICY

•Priyanka Atri •Vaishali Bhagat •Rucha Dave •Vishva Dave •Amber Maheshwari •Drashty Parikh

FLOW OF PRESENTATION

o Introduction of dividend

o Factors affecting dividend policy

o Significance and danger of dividend policy

o Forms of dividend policy

o Types of dividend policy

o Introduction of ONGCo Dividend summaryo Dividend paido ONGC dividend policyo How many times

ONGC pays dividend in a year.

o Dividend Rate & Dividend Payout Ratio

o Conclusion

INTRODUCTION OF DIVIDEND

Meaning: Dividend is that part of the profits of a company which is distributed amongst its shareholders. 

Definition: According to ICAI, "Dividend is a distribution to shareholders out of profits or reserves available for this purpose."

FACTORS AFFECTING DIVIDEND POLICY

There are mainly two factors affecting dividend policy:

1. External factors.2. Internal factors.

1) EXTERNAL FACTORS AFFECTING DIVIDEND POLICY

General state of economy. State of capital market. Legal restrictions. Contractual restrictions.

2) INTERNAL FACTORS AFFECTING DIVIDEND POLICY

Desire of the shareholders. Financial needs of the company. Nature of earnings. Desire to retain the control of management. Liquidity position.

TYPES OF DIVIDEND POLICY

Regular dividend policy Stable dividend policy 1. Constant dividend per share 

2. Constant payout ratio3. Stable rupee dividend plus extra dividend. 

Irregular dividend policy No dividend policy

FORMS OF DIVIDEND POLICY

1. Cash dividend2. Stock dividend3. Bond dividend4. Property dividend

INTRODUCTION OF ONGC ONGC is India's leading oil & gas exploration

company. produced more than 600 million metric tonnes of

crude oil. India's highest profit making corporate. It has a share of 77 percent in India's crude oil

production and 81 per cent in India's natural gas production. 

It has fully owned subsidiary, ONGC Videsh Ltd (OVL) that looks for exploration opportunities in other parts of the world.

ONGC has also acquired 72% stake in MRPL with full management control of the 9.69 tonne, state-of-the-art refinery. 

DIVIDEND SUMMARY

For the year ending March 2012, Oil and Natural Gas Corporation has declared an equity dividend of 195.00% amounting to Rs 9.75 per share. At the current share price of Rs 299.85 this results in a dividend yield of 3.25%.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

Announcement dates

Effective dates

Dividend type

Dividend remarks (%)

Dividend per share

29-01-13 22-03-13 Interim 80.00Rs.4.0000 per share (80%)

2nd Interim Dividend

04-12-12 24-12-12 Interim 100.00Rs.5 per share

(100%)Interim Dividend

29-05-12 14-09-12 Final 40.00Rs.2 per share (40%)Final

Dividend

15-02-12 19-03-12 Interim 30.00Rs.1.50 per share (30%)2Nd

Interim Dividend

02-12-11 06-01-12 Interim 125.00 -

31-05-11 18-08-11 Final 15.00Rs.0.75 per share

(15%)Final Dividend

01-12-10 20-12-10 Interim 320.00 Special Interim Dividend

31-05-10 09-09-10 Final 150.00 -

30-11-09 22-12-09 Interim 180.00 -

25-06-09 11-09-09 Final 140.00 -

05-12-08 23-12-08 Interim 180.00 -

25-06-08 08-09-08 Final 140.00 AGM

DIVIDEND PAID 

1st April,

2010 to

31st

March,

2011

1st April,

2009 to

31st

March,

2010

1st April,

2008 to

31st

March,

2009

1st April,

2007 to

31st

March,

2008

1st April,

2006 to

31st

March,

2007

1st April,

2005 to

31st

March,

2006

1st April,

2004 to

31st

March

2005

1st April,

2003 to

31st

March

2004

1st April,

2002 to

31st

March

2003

1st April,

2001 to

31st

March

2002

1st April,

2000 to

31st

March

2001

Face Value

of equity

shares (Rs.

per share)

5 10 10 10 10 10 10 10 10 10 10

Dividend(

Rs. in

millions)

74,861 70,583 68,444 68,444 66,305 64,167 57,037 34,222 42,778 19,963 15,685

Dividend

rate175% 330% 320% 320% 310% 450% 400% 240% 300% 140% 110%

Dividend

Payout

Ratio

39.56% 42.09% 42.44% 40.98% 42.39% 44.47% 43.90% 39.50% 40.60% 32.20% 30.00%

Dividend

tax(Rs. in

millions)

12,156 11,616 11,632 11,632 10,125 9,000 7,763 4,385 2,375 -- 1,600

PAT (RS. IN MILLION)

2OO7 2008 2009 2010 20110

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

156,429

167,016161,263

167,676

189,240

Series 1

Series 1

ONGC DIVIDEND POLICY

Dividend Earning per share Book closure period Dividend payment date Dividend payout ratio

DIVIDEND POLICY The policy a company uses to decide how much it will pay out to

shareholders in dividends:

Factors to consider while deciding dividends: Future capital expenditure plans, profits earned during the

financial year, cost of raising funds from alternate sources, cash flow position and applicable taxes including tax on dividends.

As per govt.’s guidelines, all profit-making PSUs in oil sector (like ONGC) should declare the higher of a minimum dividend of 30 % on equity or a minimum dividend payout of 30 % of post-tax profit. 

Since company has maintained 40% payout ratio for last 10 years, it is safe to assume that same would be maintained in future too. Since great companies generally increase their earnings over years, it can be safely assumed that dividends would increase in years to come.

HOW MANY TIMES ONGC PAYS DIVIDEND IN A YEAR? In last 8 years, ONGC has paid

dividends twice every year. Interim dividend (generally higher than final

dividend) is paid in December. This is followed by Final Dividend paid in

September.

http://3.bp.blogspot.com/-sHexTvXlYkM/UNsrQsiUcUI/AAAAAAAAAvM/uRQhtHtuodU/s1600/ONGC+Dividend+Calendar.jpg

DIVIDEND RATE & DIVIDEND PAYOUT RATIO

Regular dividend payer and this notion is validated by data

Consistently paying dividends for more than 10 years.

The table below shows the dividend rates (as % of face value). The great thing is that the dividends have been continuously increasing during the last 5 years.

A company with high dividend payout ratio can mean two things:

Either the company has no future investment plans OR

high dividend payouts are temporary (due to some asset sale) and hence not sustainable.

maintained a very stable payout ratio of 40% i.e. it shares 40% of its earnings with investors as dividends.

balancing its growth (investment) plans and wealth sharing objective on a consistent basis.

Dividend rate (%) Dividend payout ratio (%)

Dividend Rate (%) ↓

Dividend Payout ratioD

CONCLUSION

Consistent dividend policy Moderate but steady increase in dividend

payment according to the profits declarations.

Main advantage to shareholders is that they have stable dividend policy.

Low fluctuation in dividend policy The highest dividend rate paid by the

company is 450% in the year 2005-06 and the lowest was in year 2001-02 140%.

THANK YOU