Monday, 20 April 2009

Life is like that only ...?

Now the organisation declares it Q4 results ... it glorifies the saga of increase in net profit by X percent, offers bonus share to its share holders .. blah blah amidst all this global slow down...

Share holders get a free share without that extra effort and the ones who sweated out for the organisation are on the brink of losing job or pay cut or promotion hold because of this so called Global slow down....

How justifiable is this...?

7 comments:

Hitesh said...

Hum khud ki hi gulaami karte hai ....Such is the human race.
Something made me believe the following
"There are humans, there are inhumans and then there are corporates"

Bhavesh said...

ofcourse that is what you can expect. The biggest priority of any company is to maximize gains for its owners. whats wrong in that. They take risk not the employees ;)

dishantparikh said...

There are ways to look at the thing. If you can think than put yourself in place of corporate or shareholder and think what impact are they making using this announcement?

It seems you forgot to buy the share of your own organisation.... :P

CM-Chap said...

100% I'm with you on this... Thats not fair isn't it.

Note: Another fellow IT guy who got impacted by pay cut :(

Anonymous said...

You are talking about TCS which has declared 1:1 bonus

When shareholder gets bonus shares the earring per share become half, book value becomes half more over to that share price like to trade half on exchanges after ex-bonus record date.

Bonus shares just increases equity base so that company can take loans easily. These are just to promote the growth of the company. So that everybody gets benefited. In giving bonus company does not have to pay anything to share holder but they just transfer some portion form reserve to equity. More over TCS IPO is priced at Rs 800/ per share after that TCS has declared one bonus in early 2007 so effective price of IPO issue price is 400 for retail investor. Dividend declare per share for whole FY09 is Rs .13 which has effective yield of 3.25 % on Rs. 400 plus value grow of 50% in 4 years ( considering 600 current market price) . Do you think which is justified for investor who takes heavy risk?

It is not every time clear that due to bonus share holders gets benefited. Sometimes due higher liquidity in stocks, there is heavy selling worse time which leads stock price to extremely down. Even in worse time dividend declares is also half just see the March FY10 balance sheet you will understand this.

More over TCS is in real trouble because they mainly into projects of financial and auto major which biggest world giants. Some of them are bankrupt or some of them are in bad financial situation. Cost cutting and high productivity should be the aim of any software company.

There will be intermediate uptrend in software sector during next few years but afterwards growth will be at peak and there will be down turn. So Software Companies has to see emerging sector for which they needed heavy fund. In my view the emerging sector will robotics and which will emerge after 10 to 15 years. Which country will be the leader I don’t know?

Anonymous said...

TCS dividend for FY09 is Rs 14 so effective yield is 3.50 % . This is just minor correction to above post

chinmai said...

@ all, thanks for your views..
@anonymous: phew :) thanks for good description. and for sharing the glimpse of the other side of the story..keep visiting :)