Dividend Distribution Policy
(As amended and approved by the Board on January 14, 2020)
The Board of Directors (the “Board”) of Mindtree Limited (“Mindtree” or the “Company”) understands the importance of shareholders’ confidence and trust in the Company. In order to preserve the same with transparency and to ensure that there is no conflict of interest or any apprehension in the minds of its shareholders, the Board of the Company, has adopted the Dividend Distribution Policy (“Policy”) and procedures with respect to Dividends declared/ recommended by the Company in accordance with the provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) as amended from time to time.
The purpose of this Policy is to facilitate the process of dividend recommendation or declaration and its pay-out by the Company which would ensure a regular dividend income for the shareholders and long term capital appreciation for all stakeholders of the Company.
Dividend is the payment made by a Company to its shareholders, usually in the form of distribution of its profits. The profits earned by the Company can either be retained in business or used for acquisitions, expansion or diversification, or it can be distributed to the shareholders. The Company may choose to retain a part of its profits and distribute the balance among its shareholders as dividend.
The Company would ensure to strike the right balance between the quantum of dividend paid and amount of profits retained in the business. The Board will refer to the Policy while declaring/ recommending dividends on behalf of the Company.
This Policy has been adopted by the Board of the Company at its Meeting held on January 14, 2020. The Policy shall also be displayed in the Annual Report and also on the website of the Company.
FORMS OF DIVIDENDS
- Interim Dividend
The interim dividend may be declared by the Board one or more times in the financial year as may be deemed fit.
- Final Dividend
The final dividend is paid once for the financial year after the annual accounts are prepared. The Board of Directors of the Company has the power to recommend the payment of final dividend to the shareholders for their approval at the Annual General Meeting of the Company. The declaration of final dividend shall be included in the ordinary business items that are required to be transacted at the Annual General Meeting.
- Special Dividend
The Board may declare/recommend special dividend as and when it deems fit.
PER SHARE BASIS
The dividend will be declared on per share basis only.
The Board of Directors shall endeavor to take a decision for Dividend Distribution with an objective to enhance shareholders value. However, the decision regarding pay-out is subject to several parameters which form part of this Policy.
The Dividend once declared or approved will be paid/ distributed within the statutory period permitted by law.
DECLARATION OF DIVIDEND
Dividend shall be declared or paid only out of –
1) Current financial year’s profit:
- after providing for depreciation in accordance with law;
- after transferring to reserves such amount as may be prescribed or as may be otherwise considered appropriate by the Board at its discretion and as per applicable law.
2) The profits for any previous financial year(s) after providing for depreciation in accordance with law and remaining undistributed;
3) Out of 1) & 2) both.
In case of inadequacy or absence of profits in any financial year, the Company may also declare/ pay Dividend out of the accumulated profits earned by it in previous years and transferred by the Company to the reserves, provided such declaration/ payment of dividend shall be made only in accordance with the provisions of the Companies Act, 2013 and rules specified therein.
FINANCIAL PARAMETERS CONSIDERED WHILE DECLARING DIVIDEND
The financial parameters that may be considered before declaring dividend are profitability, cash flow and future growth and profitability outlook of the company.
CIRCUMSTANCES UNDER WHICH SHAREHOLDERS MAY NOT EXPECT DIVIDEND/ OR WHEN THE DIVIDEND COULD NOT BE DECLARED BY THE COMPANY SHALL BE FOR THE REASONS STATED HEREIN, BUT ARE NOT LIMITED TO, THE FOLLOWING REASONS ONLY.
- Due to operation of any other law in force;
- Due to losses incurred by the Company and the Board considers it appropriate not to declare dividend for any particular year;
- Due to any restrictions and covenants contained in any agreement as may be entered with the Lenders;
- Uncertainty of the earnings/ financial results of the Company; and
- The availability of opportunities for reinvestments of surplus funds;
- Any other corporate action resulting in cash outflow
FACTORS AFFECTING DIVIDEND DECLARATION:
a) External Factors to be considered while recommending/ declaring dividend
- Any significant changes in macro-economic environment affecting India or the geographies in which the Company operates, or the business of the Company or of its clients;
- Any political, tax and regulatory changes in the geographies in which the Company operates;
- Any significant change in the business or technological environment resulting in the Company making significant investments to effect the necessary changes to its business model;
- Any changes in the competitive environment requiring significant investment.
b) Internal Factors to be considered while recommending/ declaring dividend
Apart from the various external factors, the Board shall take into account various internal factors including the financial parameters while declaring dividend, which inter alia will include:
- Expected cash requirements of the Company including working capital, capital expenditure
- Quarterly and Annual results
- Investments including Mergers and Acquisitions (M&A)
- Free cash flow generation
- Buy-back of shares
- Funds required to service any outstanding loans;
c) Retained Earnings
Retained earnings would be used to further the company’s business priorities. If there are excess reserves beyond the medium to long term business requirements, the retained earnings would be distributed to shareholders via Dividends or other means as permitted by applicable regulations.
d) Parameters that shall be adopted with regard to various classes of shares
Currently, the Company does not have different classes of shares and follows the ‘one share, one vote’ principle. If the Company has more than one class of shares in future, dividend for each class would be subject to prescribed statutory guidelines as well as terms of offer of each class to the investors of that class of shares.
REVIEW & AMENDMENT
This Policy may be reviewed and amended periodically as and when required by the Board to ensure that it meets the objectives of the relevant legislation and needs of the Company and remains effective. The Board has the right to change/ amend the policy as may be expedient taking into account the law for the time being in force.
In the event of any amendment(s), clarification(s), circular(s), provision(s) etc. issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then the same shall prevail upon the provisions hereunder and this Policy shall stand amended accordingly.