NEW DELHI, April 13: Shareholders of Dr Beck & Col have every reason to smile. The company has recently announced a high special interim dividend of 138.5 per cent after spinning off one of its divisions. This puts Dr Beck & Col in the same league as Glaxo (India) and Lakme Ltd who, too, have rewarded their shareholders with the proceeds received from the sale of their business divisons.Lakme has rewarded its shareholders with a dividend of 600 per cent, after selling its brands and manufacturing facility to HLL. Similalrly, Glaxo had announced a special interim dividend of 175 per cent in 1995 after selling the family products division for over Rs 210 crore.
At Dr Beck & Col's current market price of Rs 62, the interim dividend of 138.5 per cent gives an attractive dividend yield of 23 per cent. This is precisely why the stock has shot up from Rs 42 to Rs 62 in less than 10 days.
Dr Beck & Col recently sold off its automotive paints divisiuon to BASF AG's 100 per cent subsidiary, BASF Industries, forRs 14 crore. The decision to sell the automotive paints division came after BASF AG divested its entire 51 per cent equity in Dr Beck & Co (India) to the Schenectady group, USA, the world's largest producer of alkyl phenols. The company received the shareholders approval for the transfer of the automotive paints business to BASF Industries in India in December 1997.
On a total equity of Rs 7.09 crore, dividend of Rs 13.85 would involve a total cash outflow of Rs 9.82 crore. The company has fixed May 5 as the record date for the interim dividend. ``The special dividend is being paid out of the opening balance of the surplus in the profit and loss account'', said a company official. However, the utilisation of surplus in the profit and loss account would in turn reduce the reserves and surplus which stood at Rs 27.43 crore on March 1997.
Interestingly, this special dividend comes at a time when the company has failed to maintain its profitability for the past two years. The net profit dropped from Rs 3.9crore in 1995-96 to Rs 1.6 crore in 1996-97. For the first-half ended September 1997, the company's net stood at Rs 0.62 crore against Rs 1.41 crore, a drop of 56 per cent.
According to a company official, however, Dr Beck & Col is expecting a much better performance in the second-half. ``We to exceed last year's figure,'' said the official. Dr Beck & Col manufactures a wide range of products in electrical insulations, construction chemicals, and automotive and container coatings at its facilities in Pimpri near Pune in Maharashtra and Ankleshwar in Gujarat.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
