Getty ImagesRelated
Mumbai: is at the receiving end of investor ire after the cut in its annual dividends in FY21.
The company’s dividend payout ratio that was at an average of 49 per cent in the past five years has now reduced to 13 per cent during the past fiscal.
Investors and analysts raised their concerns over the lower dividend payout in a conference call last week.
The meeting attended by Sun TV’s managing director R Mahesh Kumar, group chief financial officer SL Narayanan, and CFO VC Unnikrishnan, was a stormy affair as market participants quizzed the management on the cut even as the company had Rs 3,800 crore cash in books.
“There should be some explanation to shareholders. I don’t know why there is no understanding of shareholder value creation for the last 10 years. In case you are expecting zero revenue, I can understand. But nobody in this country is expecting zero revenues,” said Jiten Doshi, co-founder of Enam Asset Management.
Doshi told ET, his concerns were limited to the fall in dividends. “I have no issues with the company’s balance sheet or its corporate governance but reducing payout ratio from a five-year average of 49 per cent to 13 per cent in FY21 despite having more than Rs 3,800 crore cash is not acceptable.” Enam’s holding in Sun TV could not be ascertained.
Sun TV did not respond to email queries on the matter.
Narayanan defended the move citing it was a decision of the board and that it felt the need to preserve cash amid the volatile business sentiment. “We thought by March everything was over because from December to March, we saw a fairly good uptick in the traction for ad revenues, but then suddenly towards the end of the quarter and at the beginning of June quarter, we saw all kinds of volatility arising out of the second wave,” he said.
Doshi also asked the management why the company did not cut the commissions to promoters if preserving cash was the motive.
Narayanan responded that the commission payouts have been unchanged in the past four years. Promoters Kalanithi Maran and his wife Kavery are the highest-paid executives in India. The couple took Rs 175 crore in FY20 and a similar amount in FY21.
Another attendee Venkatesh Subramanian of LogicTree Capital Advisors raised questions about the balance sheet. “It actually makes us wonder if there is cash in the books.” In response, Narayanan said: “I think that’s going a bit too far. Let’s not get into that kind of street-level dialogue.”
The company’s dividend payout ratio that was at an average of 49 per cent in the past five years has now reduced to 13 per cent during the past fiscal.
Investors and analysts raised their concerns over the lower dividend payout in a conference call last week.
The meeting attended by Sun TV’s managing director R Mahesh Kumar, group chief financial officer SL Narayanan, and CFO VC Unnikrishnan, was a stormy affair as market participants quizzed the management on the cut even as the company had Rs 3,800 crore cash in books.
“There should be some explanation to shareholders. I don’t know why there is no understanding of shareholder value creation for the last 10 years. In case you are expecting zero revenue, I can understand. But nobody in this country is expecting zero revenues,” said Jiten Doshi, co-founder of Enam Asset Management.
Doshi told ET, his concerns were limited to the fall in dividends. “I have no issues with the company’s balance sheet or its corporate governance but reducing payout ratio from a five-year average of 49 per cent to 13 per cent in FY21 despite having more than Rs 3,800 crore cash is not acceptable.” Enam’s holding in Sun TV could not be ascertained.
Sun TV did not respond to email queries on the matter.
Narayanan defended the move citing it was a decision of the board and that it felt the need to preserve cash amid the volatile business sentiment. “We thought by March everything was over because from December to March, we saw a fairly good uptick in the traction for ad revenues, but then suddenly towards the end of the quarter and at the beginning of June quarter, we saw all kinds of volatility arising out of the second wave,” he said.
Doshi also asked the management why the company did not cut the commissions to promoters if preserving cash was the motive.
Narayanan responded that the commission payouts have been unchanged in the past four years. Promoters Kalanithi Maran and his wife Kavery are the highest-paid executives in India. The couple took Rs 175 crore in FY20 and a similar amount in FY21.
Another attendee Venkatesh Subramanian of LogicTree Capital Advisors raised questions about the balance sheet. “It actually makes us wonder if there is cash in the books.” In response, Narayanan said: “I think that’s going a bit too far. Let’s not get into that kind of street-level dialogue.”
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.