Despite making losses, 24 listed companies proposed dividends in FY25
Many listed companies have proposed dividends for FY25 despite making losses in the fiscal on a standalone basis - subject to shareholder approval - and based on ownership ranging from 33-75%, promoters stand to receive a significant share as dividend income even as the business failed to post a profit. While the company law in India allows dividends to be paid only from current year profit, it permits distributions from accumulated earnings under specific conditions.
According to an analysis, at least 22 companies that posted net loss on a standalone basis in FY25 have declared dividends. Many of these firms had reported profit at the consolidated level due to the performance of their subsidiaries. However, as per the Companies Act, dividend declaration must be based on standalone financials, even though consolidated results are required for disclosure under listing obligations.
Among the loss-making companies, EID Parry India has declared the highest dividend at 900%- equivalent to Rs. 9 per share on a face value of Re 1. Edelweiss Financial Services proposed a 150% dividend, or Rs. 1.50 per share. EID Parry had reported a standalone net loss of more than Rs. 428 crore, while Edelweiss Financial posted a Rs. 52 crore loss for the fiscal year. Aditya Birla Real Estate and SH Kelkar and Co too have declared dividends of Rs. 22.4 crore and Rs. 13.8 crore respectively, despite standalone losses of Rs. 15 crore and Rs. 13.5 crore.
Interestingly, several companies have declared dividend that surpassed their annual losses. Majestic Auto, which reported a loss of Rs. 3.4 crore in FY25, announced a dividend of Rs. 10.4 crore, with Rs. 7.8 crore going to promoters. IL&FS Investment Managers, Oricon Enterprises, and 63 Moons Technologies reported losses of Rs. 2.2 crore, Rs. 4.9 crore, and Rs. 1.8 crore respectively, yet declared dividends of Rs. 8.79 crore, Rs. 7.85 crore, and Rs. 5.53 crore. Of these sums, promoters of each of the company are set to receive Rs. 4.43 crore, Rs. 5.16 crore, and Rs. 2.52 crore respectively.
