MAHINDRA & MAHINDRA LTD. Board’s Report 105 ANNEXURE I Dividend Distribution Policy The Dividend Distribution Policy (“the policy”) establishes the principles to ascertain amounts that can be distributed to equity shareholders as dividend by the Company as well as enable the Company strike balance between pay-out and retained earnings, in order to address future needs of the Company. The policy shall come into force for accounting periods beginning from 1st April, 2016. Dividend would continue to be declared on per share basis on the Ordinary Equity Shares of the Company having face value Rs. 5 each. The Company currently has no other class of shares. Therefore, dividend declared will be distributed amongst all shareholders, based on their shareholding on the record date. Dividends will generally be recommended by the Board once a year, after the announcement of the full year results and before the Annual General Meeting (AGM) of the shareholders, as may be permitted by the Companies Act. The Board may also declare interim dividends as may be permitted by the Companies Act. The Company has had a consistent dividend policy that balances the objective of appropriately rewarding shareholders through dividends and to support the future growth. As in the past, subject to the provisions of the applicable law, the Company’s dividend payout will be determined based on available financial resources, investment requirements and taking into account optimal shareholder return. Within these parameters, the Company would endeavor to maintain a total dividend pay-out ratio in the range of 20% to 35% of the annual standalone Profits after Tax (PAT) of the Company. While determining the nature and quantum of the dividend payout, including amending the suggested payout range as above, the Board would take into account the following factors: ● Internal Factors: i. Profitable growth of the Company and specifically, profits earned during the financial year as compared with: a. Previous years and b. Internal budgets, ii. Cash flow position of the Company, iii. Accumulated reserves, iv. Earnings stability, v. Future cash requirements for organic growth/expansion and/or for inorganic growth, vi. Brand acquisitions, vii. Current and future leverage and, under exceptional circumstances, the amount of contingent liabilities, viii. Deployment of funds in short term marketable investments, ix. Long term investments, x. Capital expenditure(s), and xi. The ratio of debt to equity (at net debt and gross debt level). ● External Factors: i. Business cycles, ii. Economic environment, iii. Cost of external financing, iv. Applicable taxes including tax on dividend,
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