MUMBAI: Cash-rich India Inc does not seem to be through with rewarding its shareholders. After paying out hefty dividends in FY06, many companies are now pampering shareholders with bonus share issues.

About 10 companies have announced bonus issues in the past few weeks. Interestingly, some of the public sector undertakings, normally considered a stingy lot when it comes to bonus issues, have joined the bandwagon. ONGC and Bhel are two major examples. There is also talk that profit-making PSUs Bharat Electronics and Container Corporation are also planning bonus share issues. Bharat Electronics, however, has denied the talk.

ONGC is offering a 1:2 bonus issue, while Bhel is yet announce the ratio. The latter’s board met on August 8 to consider a stock split and bonus, but no decision was taken at the meeting. This may perhaps be the first time in history that the two PSUs are offering bonus shares to shareholders. ONGC rose 1.7% to Rs 1,214 while Bhel was up 1.2% at Rs 2,178 on Monday.

“With the strengthening of financial positions due to the sustained growth of the past few years, more PSUs are expected to reward their shareholders in future.

The market is abuzz with rumours that many other profit-making PSUs may follow in footsteps of ONGC and Bhel,” said an analyst with a leading brokerage house.

The government, the single-largest shareholder in ONGC and Bhel, will be the major beneficiary of the bonus offer. Based on their shareholding patterns filed with the BSE, the government held 74% in ONGC as on June 30 ’06 and nearly 68% in Bhel as on March 31 ‘06. Both companies have announced attractive dividends for ‘05-06 and have also reported strong numbers for the quarter ended June ‘30 ‘06. For instance, Bhel paid a total dividend of 145%, including special dividend of 85%, while ONGC pleased its shareholders with a whopping 450% dividend.

Past trend shows that private sector corporates have been more generous than their PSU counterparts when it comes to offering bonus shares. IT companies led by Infosys Technologies have been among the most consistent ones. Old economy heavyweights like ITC, Gujarat Ambuja Cement and M&M had announced bonus issues last year.

Apart from ONGC and Bhel, there are many other medium and small-sized companies which have, of late, boarded the bandwagon. They are Swasti Vinayaka Gems (1:2 bonus), Jay Bharat Maruti (1:1), Maharaja Shree Umaid Mills (1:1), Jagran Prakashan (1:5), La Opala RG (1:1), Supreme Industries (1:1) and Sukhjit Starch & Chemicals (1:1).

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