Dividend Distribution Policy
1. Background and Legal framework:
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Regulations”) require the top 500 listed companies (by market capitalisation) to formulate and disclose a Dividend Distribution Policy in the annual report and on the website of the Company.
As on 31st March, 2019, Garware Technical Fibres Limited (“Company”) is amongst the top 500 listed companies (by market capitalisation). The Board of Directors (“Board”) of the Company has adopted this Dividend Distribution Policy, which endeavours for fairness, consistency and sustainability, while distributing profits to the Members.
2. Effective date:
The Dividend Distribution Policy will become effective from the date of its approval and adoption by the Board, i.e. 30th May, 2019.
The Dividend Distribution Policy will be applicable in respect of dividend(s) declared by the Company during any financial year commencing from 1st April, 2019.
This Policy shall not apply to:
a. Determination and declaration of dividend on preference shares, if any issued or to be issued by the Company, since dividend on preference shares will always be as per the terms of issue approved by the Members;
b. In case of issuance of fully or partly paid up bonus share or other securities;
c. Distribution of cash (i) by way of share buy-back scheme or any other alternate profit distribution measure (ii) reduction of capital of the Company and (iii) on account of payment of fraction entitlement due to sub-division, split of securities or any such similar corporate action by the Company;
The Objective of this Policy is to enumerate the details of the broad parameters that would be considered by the Board of Directors of the Company to declare or not to declare any dividend from time to time.
5. Parameters / Factors, that shall be considered for declaration of dividend:
The Company shall pay dividend (including Interim dividend), if any in the compliance with provisions of Section 123 of the Companies Act, 2013 read with the Companies (Declaration and Payment of Dividend) Rules, 2014 and the Regulation or other application provisions, if any.
The Board of Directors will refer to this Policy for declaration of interim dividend or while recommending final dividend to Members for their approval in the Annual General Meeting.
The Board of Director would, inter alia consider the following parameters while declaring or recommending the dividend.
a. Internal factors / financial parameters:
• Distributable surplus available as per the provisions of the Companies Act, 2013 and the Regulations;
• The Company’s liquidity position and future cash flow needs;
• Working Capital and Capital expenditure requirements;
• Capital requirements considering the expansion/ modernization plans, long term strategic plans, new businesses, diversification of business, acquisition, investment or growth opportunities;
• Cost and availability of alternative sources of financing;
• Contractual covenants;
• Provisioning for financial implications arising out of unforeseen events and / or contingencies;
• Track record of dividends distributed by the Company; and
• Any special event or achievement or events of similar nature.
b. External factors:
• Prevailing legal requirements, regulatory conditions or restrictions laid down under the Applicable laws including tax laws;
• Economic and regulatory environment including industry or sectoral considerations; and
• Industry growth rate.
In addition to the above, the Board of Directors may consider such other factors as it may consider relevant before declaring or not declaring any dividend from time to time.
6. Circumstances under which shareholders may not expect any Dividend
The Members of the Company may not expect dividend in the following circumstances, subject to discretion of the Board of Directors:-
a. Proposed expansion or modernization plans requiring higher capital allocation;
b. Plans to undertake any acquisitions, amalgamation, merger, joint ventures, new product launches, long-term strategic plans, diversification, etc., which may require significant capital outflow;
c. Requirement of higher working capital for the purpose of business of the Company;
d. The Company has implemented or intends to implement, a share buy-back scheme or any other alternate profit distribution measure;
e. In the event of loss or in adequacy of profits; and
f. Other internal and external factors as mentioned in clause 5 of this Policy impeding the dividend payment.
7. Utilisation of retained earnings:
The Board of Directors may retain its earnings in order to make better use of the available funds and increase the value of the stakeholders from long term prospective. The decision of utilisation of retained earnings of the Company shall be based on the following factors:-
a. Plan expansion / modernization plans, long term strategic plans, new businesses, diversification of business, acquisition and investment opportunities;
b. Cost and availability of alternative sources of financing;
c. Market or product development / expansion plan;
d. Increase in production capacity;
e. Replacement of Capital intensive assets; and
f. Any other factor, which the board may consider relevant for determining the manner of utilization of retained earnings
8. Parameters adopted with regard to various classes of shares
The Company currently has only one class of shares, viz. equity, for which this Policy is applicable. This Policy is subject to review if and when the Company issues different classes of shares.
9. Modification of the Policy
The Board may change / amend this Policy from time to time at its sole discretion and / or in pursuance of any amendments made in the Companies Act, 2013, the Regulations, etc.
This document does not solicit investments in the Company’s securities. Nor is it an assurance of guaranteed returns (in any form), for investments in the Company’s equity shares.