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Experts advise loss-making companies to get lender consent before paying dividends to avoid misallocation. They must also consider future plans, share price and global conditions
Legally, there is no restriction on paying dividends from accumulated profits. (Representative/Shutterstock)
Investors are often drawn to shares of companies that pay dividends. Even if share prices remain stagnant, dividends provide a consistent return. According to the Company Law of India, dividends are typically distributed when companies make profits. However, under certain conditions, companies can pay dividends from their accumulated profits.
Moneycontrol has identified 22 companies that are set to distribute dividends soon, despite many of them reporting losses in the last financial year (FY25).
| Company | Standalone Net Loss (₹ Cr) | Dividend % | Promoters’ Holding (%) | Total Dividend (₹ Cr) | Promoters’ Share in Dividend (₹ Cr) |
| EID Parry India | -428.3 | 900 | 41.6 | 160.02 | 66.58 |
| Edelweiss Financial Services | -51.9 | 150 | 32.7 | 138.21 | 45.21 |
| Aditya Birla Real Estate | -15.1 | 20 | 50.2 | 22.34 | 11.22 |
| SH Kelkar And Company | -13.6 | 10 | 55.5 | 13.84 | 7.68 |
| Majestic Auto | -3.4 | 100 | 75 | 10.4 | 7.8 |
| IL&FS Investment Managers | -2.2 | 14 | 50.4 | 8.79 | 4.43 |
| Manali Petrochemicals | -8.7 | 10 | 44.9 | 8.6 | 3.86 |
| Oricon Enterprises | -4.9 | 25 | 65.7 | 7.85 | 5.16 |
| 63 Moons Technologies | -1.8 | 60 | 45.6 | 5.53 | 2.52 |
| Alphageo (India) | -7.6 | 80 | 46 | 5.1 | 2.35 |
| K.C.P. | -2.4 | 25 | 44.3 | 3.22 | 1.43 |
| Zuari Industries | -37.4 | 10 | 56.7 | 2.98 | 1.69 |
| Kakatiya Cement Sugar & Industries | -13.3 | 30 | 54.3 | 2.33 | 1.26 |
| Texmaco Infrastructure & Holdings | -8.6 | 15 | 65.8 | 1.91 | 1.26 |
| Pokarna | -7 | 30 | 56.7 | 1.86 | 1.05 |
| Indoco Remedies | -8.7 | 10 | 58.9 | 1.85 | 1.09 |
| Mysore Petro Chemicals | -7.7 | 20 | 73 | 1.32 | 0.96 |
| Pratap Snacks | -34.3 | 10 | 54.9 | 1.19 | 0.66 |
| KCP Sugar And Industries | -1.7 | 10 | 40.6 | 1.13 | 0.46 |
| HB Portfolio | -0.8 | 10 | 61.5 | 1.08 | 0.66 |
| Super Sales India | -1.8 | 25 | 59.4 | 0.77 | 0.46 |
| HB Stockholdings | -12 | 10 | 53.2 | 0.71 | 0.38 |
| Flex Foods | -32.5 | 5 | 59.9 | 0.62 | 0.37 |
| Alkali Metals | -5.8 | 5 | 69.6 | 0.51 | 0.35 |
| Rajapalayam Mills | -50.2 | 5 | 56.3 | 0.46 | 0.26 |
| Bharat Bhushan Finance | -0.1 | 6 | 54.4 | 0.2 | 0.11 |
| West Leisure Resorts | 0 | 1 | 71.1 | 0.03 | 0.02 |
| MPIL Corporation | -2.3 | 4.5 | 74.8 | 0.03 | 0.02 |
These companies have announced dividends despite standalone losses, while some have shown profits at the group level due to their subsidiaries. However, the law mandates that dividend decisions should be based on the standalone financial position of the company.
For instance, EID Parry India has declared a dividend of 900% of its face value — Rs 9 per share on a Rs 1 share. Similarly, Edelweiss Financial Services has announced a 150% dividend, or Rs 1.50 per Rs 1 share. EID Parry will pay Rs 160 crore in total dividends, of which promoters holding a 41.6% stake will receive around Rs 66.6 crore. Edelweiss Financial will disburse Rs 138 crore, with its promoters, who own a 32.7% stake, getting over Rs 45 crore. Notably, this comes despite EID Parry posting a Rs 428 crore loss and Edelweiss reporting a Rs 52 crore loss.
Dividend Declared More Than Loss
Aditya Birla Real Estate and SH Kelkar and Co also declared dividends of Rs 22.4 crore and Rs 13.8 crore respectively despite losses. Some other companies declared dividends ranging from Rs 2 lakh to Rs 10 crore.
The notable point is that some companies decided to pay dividends exceeding their losses. For example, Majestic Auto declared a dividend of Rs 10.4 crore despite a loss of Rs 3.4 crore, with Rs 7.8 crore going to the promoters. IL&FS Investment Managers, Oricon Enterprises, and 63 Moon Technologies also announced dividends higher than their losses.
What Experts Say
Experts advise that loss-making companies should obtain consent from their lenders before paying dividends to ensure funds are not misallocated. Additionally, companies must consider factors such as future plans, share price, and global economic conditions that could impact expenses before declaring dividends.
Legally, there is no restriction on paying dividends from accumulated profits, but strict rules apply when dividends are paid from general reserves. In all cases, companies must first offset their losses and depreciation. While the board can declare interim dividends from old profits without shareholder approval, dividends from general reserves require shareholders’ consent.
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