Reliance Industries, India's biggest private-sector conglomerate, has definitely rewarded shareholders in the long term.
For the year ending March 2012, the company announced a record dividend of Rs 2,941 crore (inclusive of tax of Rs 410 crore) . That is the highest-ever dividend payout by the company in its history, chairman Mukesh Ambani said at Reliance's annual general meeting (AGM) on Thursday (see table).
The company had recommended a dividend of Rs 8.5 per equity share ( Rs 8 last year) on every share of Rs 10 for 2011-2012.
Speaking at its 35th AGM since the company's initial public offer in 1977, Ambani pointed out that if any investor had invested Rs 1,000 to buy Reliance shares at the time of the IPO, that investment would have grown to a whopping Rs 7.78 lakh today, representing a compounded annual growth rate (CAGR) of 21.6 percent.
In the same period, RIL's revenues grew by 27 percent, while profits jumped by 29 percent (CAGR).
The company is currently sitting on cash and investments of over Rs 70,000 crore ($13.8 billion).
At the AGM, Ambani said the company expected to double operating profit over the next five years.For the year ended March 2012, the company's operating profits were more or less flat at Rs 40,702 crore.
Reliance currently has a share buyback scheme open: at the time of the buyback announcement, the company said it would buy back up to 12 crore shares at a price not exceeding Rs 870 per equity share, up to an amount not exceeding Rs 10,440 crore.
So far, the company has bought back 2.7 crore shares at a cost of Rs 1,929 crore, representing 22.5 percent of its share buyback target.Ambani said the share buybackrepresents "highly accretive use of cash by the company".
It is the company's second buyback since 2005 and the biggest ever in India's corporate history.