Bonuses jump in FY17 as 5 PSUs dole out surplus -Governance Now

Bonuses jump in FY17 as 5 PSUs dole out surplus

IOC, REC and PFC have recommended issue of bonus shares in the ratio of 1:1 and HPCL has declared a bonus in the ratio of 2:1.

GN Bureau | September 2, 2016

#IOC #REC #PFC #BPCL #HPCL #bonus shares

Five public sector companies - Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation (IOC), Rural Electrification Corporation (REC), and Power Finance Corporation (PFC) - have declared a bonus in the first five months of the current financial year.

Last year, Bharat Electronics was the only CPSE that had issued bonus shares during this period.

These five companies have reported 18 per cent year-on-year growth in their aggregate net profit in April-June (Q1) quarter. On a sequential basis, the combined net profit of these companies has almost doubled.

Overall also the number of companies that have announced a bonus issue has surpassed last year’s figure, with 41 companies, compared with 30 companies in the corresponding period a year ago, according to a news report in Business Standard.

IOC, REC and PFC have recommended issue of bonus shares in the ratio of 1:1. This means one equity bonus share of Rs 10 each against every existing equity share of Rs 10 each. HPCL has declared a bonus in the ratio of 2:1.

A bonus is given to existing stockholders in proportion to the number of shares they already hold. The purpose is to increase liquidity in the stock and hand out the available distributable net worth in a cash-neutral manner.

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