The Ranbaxy scrip spurted Rs 30 on Tuesday to Rs 619.50 from Monday's closing price of Rs 589.50. The board of directors has recommended a final dividend of Rs 7.75 per share (payout Rs 53.10 crore), taking the total dividend for 1997-98 to Rs 10 per share. The company had announced an interim dividend of Rs 2.25 per share earlier in the year. The payout ratio has also increased to 28.4 per cent in the last financial, against 23.6 per cent in 1996-97. Chairman and managing director Parvinder Singh said that the company had benefited from the expansion and globalization drive which it started fiveyears ago. "The future promises even stronger growth as our research and development (R&D) efforts continue to provide a robust product pipeline for the domestic and international markets," he added.

Ranbaxy has also recorded a 16.1 per cent increase in exports at Rs 595.7 crore, against Rs 522.40 crore in 1996-97. Profit before interest and depreciation stood at Rs 240.30 crore, an increase of 12.3 per cent, against Rs 214.00 crore in 1996-97.

Earnings per share (EPS) for the year, based on the increased equity share capital of Rs 53.70 crore at the end of the year, stood at Rs 34.74. The EPS in the previous year was Rs 32.47 on a share capital of Rs 49.40 crore. The gross block has also gone up by 21.3 per cent to Rs 663.20 crore, from Rs 546.90 crore in 1996-97.

The company's net interest expense was Rs 1.5 crore, a depreciation charge of Rs 37.60 crore and a provision for tax of Rs 14.50 crore. Ranbaxy Laboratories, India's largest pharmaceutical company, manufactures and markets branded genericpharmaceutical products, bulk substances and intermediates. The company has manufacturing operations in seven countries and sells its products in nearly 40 nations. Ranbaxy is also the largest spender on R&D activity, and has an expanding international portfolio of affiliates, joint ventures and alliances.

Insight -- Payout ratio is low

Ranbaxy's results for 1997-98 have not been too good and the one for one bonus creates an illusion of gain for shareholders.

As on March 31, 1997, the company had a paid-up capital of Rs 494.15 crore, compared to reserves of Rs 10,436.79 crore. The share's book value was already high at Rs 222 as at 1997 March-end. Ranbaxy's payout ratio at 28.4 per cent is extremely low.

Shareholders would have gained far more if the ratio was substantially increased, rather than the reserves being capitalised, since while selling shares attracts capital-gains tax, there is no tax on dividends in the hands of the shareholder.