Evaluating the Dividend Policy of Aditya Birla Minerals Limited

This report analyzes the dividend policy of Aditya Birla Minerals Limited, an Australian copper mining company and subsidiary of Hindalco Industries Ltd. Established in 2003, the company's dividend payouts were observed in 2008, 2011, and 2012, but ceased thereafter due to prolonged losses and falling copper prices. The report considers factors influencing dividend payouts such as earnings stability, cash flow, economic environment, and industry outlook, as outlined in the company's Dividend Distribution Policy under SEBI regulations. The analysis reveals that the company's dividend distribution is heavily reliant on its profitability and retained earnings. The decision to shut down copper mines in Australia was influenced by the mismatch between copper prices and production costs, impacting the company's financial performance and investor returns. The report concludes that the company's poor performance and the volatility in copper prices led to its divestment and inability to provide dividends to investors.

ADITYA BIRLA MINERALS
LIMITED

ADITYA BIRLA MINERALS LIMITED
Established in 2003 and located in Perth
It is engaged in mining, exploring and processing of
copper metal in Australia.
It holds interest in the Birla Nifty Copper Mine situated
in the Greta Sandy Desert Region of the Eat Pilbara
in Western Australia and the Birla Mt Gordon copper
operation situated in Northwest Queensland (ABY,
2017).
It is a subsidiary of Hindalco Industries Ltd.

VISION AND MISSION
 Vision
To attain the position of a conglomerate and have a
clear focus on the overall business.
 Mission
To provide superior value to the customers, shareholder,
and employees.
 Value
Integrity – the company follows the highest level of
professionalism. The integrity is not limited to the
intellectual one rather surrounds all (ABY, 2017).
Commitment – it strives to perform in the best manner
to deliver stakeholder value.
Passion – the pursuit of goals is being done with a
strong level of enthusiasm.

 Seamlessness - The operations continue by
thinking and working across the functional
groups. Competencies, synergy leads to the
unity of the organization.
 Speed – The company responds to the
external and internal environment in an
expedite manner. This leads to enhancing of
the organizational efficiency (ABY, 2017).

SUSTAINABILITY
A sustainable business is one that can live
within the limitations of the sustainable
world. ABM reduce its influence on the
externalities and adapt to the trend in the
market (ABY, 2017).

SHARE PRICE MOVEMENT
The share price movement chart provides an
indication that the company had its peak in
2008 and 2009 after which it failed to keep
the momentum. The share price tumbled
down and had a poor performance from the
year 2014 (ABY , 2017).

WHY DIVIDEND POLICY?
Dividend policy is a prescribed set of
guidelines that is utilized by a company to
decide the earnings that will be paid to the
shareholders (Parrino et. al, 2012).
The main aim of the policy is to aware the
stakeholders on the dividend distribution
structure that needs to be adopted by the
company. The Board of Directors can
recommend the dividend after a compliance
with the policy of the Companies Act 2013
and other important regulations. (ABY
Dividend, 2017)

ABY DIVIDEND
Steady income is associated with dividend and
hence, the stock is more recommended. The
dividend payment even stress upon the
fundamentals and strength of the company
(Peirson et. al, 2015). However, the ABY had a
poor show and after 2012 it failed to provide any
dividend.

FACTORS CONSIDERED BY ADITYA BIRLA
MINERALS FOR DIVIDEND PAYOUT
As per Porter & Norton (2014), before the
payment of dividend the following internal
and external factors are considered by the
Board however, not limited to it:
 Earnings stability
 Cash flow from operations
 Total economic environment
 Outlook of the industry
 Contingent liabilities
 Past trend of the dividend

DIVIDEND DISTRIBUTION POLICY
As per the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015
the company is needed to formulate, as well
as disclose the Dividend Distribution Policy
(ABY Dividend, 2017).
Aditya Birla Minerals Ltd. Board of directors
approved the Dividend Distribution Policy
that was held in its meeting on 13th February,
2017.

TARGET DIVIDEND PAYOUT
 Dividend to be declared by Aditya Birla
Money out of the current year profit.
 In circumstances of exceptional nature
including however not constrained to loss
after tax, the Board might consider utilization
of retained earnings for dividend declaration
(Porter & Norton, 2014).

ANNUAL DIVIDEND
The payment of dividend was observed in 2008, 2011 and 2012 respectively.
Further, in the other years no dividend was declared. In 2016, the loss
posted by Aditya Minerals Limited surged to 3509 crores in sales and the
dividend were affected in many years owing to absence of profits.

CURRENT SCEANRIO
The subsidiary performance was badly
impacted by the falling prices of copper.
Hindalco provided 258 crore for the
diminution in the value in the financial
statements.
Against the value of RS 222 crore, the value of
transaction amounted to Rs 270 crore. It
stands lower to the original investment
however, is more than the current book value
(Mallick, 2017).
The divestment of ABY will help the
consolidated profit of Hindalco.

ANALYSIS
 The study and analysis indicates that the
dividend of the company depends on profit
scenario or the retained earnings of the
company.
 ABY failed to reap profit and incurred losses
for a prolong time thereby failed to provide
benefits to the investors.
 The Share prices tumbled down owing to the
volatility in the prices of copper. This led to
the divestment (ABY , 2017).

CONCLUSION
 ABY decided to shut the copper mines in
Australia owing to the problem in the copper
prices
 The copper price failed to support the product
cost and hence, owing to the difference, the
decision was crafted.
 The performance of production at the Mt.
Gordon operations has been lower other than
the expectations. The current unit operating
cost is reasonably higher that impact the
profitability of the company leading to losses
and no appreciation for the investors in terms
of dividend (ABY , 2017).

REFERENCES
ABY 2017, Aditya Birla Minerals Ltd, viewed 31 March, 2018
https://www.intelligentinvestor.com.au/company/aditya-birla-minerals-limited-ABY-13789/a
nnouncements
Mallick, J 2017, Aditya Birla plans to shut Australian copper mine, viewed 31 March 2017
https://www.thehindubusinessline.com/companies/Aditya-Birla-plans-to-shut-Australian-copp
er-mine/article20592673.ece
Porter, G & Norton, C 2014, Financial Accounting: The Impact on Decision Maker, Texas:
Cengage Learning
Peirson, G, Brown, R., Easton, S, Howard, P & Pinder, S 2015, Business Finance, 12th ed.,
North Ryde: McGraw-Hill Australia.
Parrino, R, Kidwell, D. & Bates, T 2012, Fundamentals of corporate finance, Hoboken, NJ:
Wiley
ABY Dividend 2017, Dividend History for ADITYA BIRLA MINERALS LIMITED (ABY), viewed 31
March 2017 http://www.sharedividends.com.au/aby+history
ABY 2017, Aditya Birla Minerals Ltd, viewed 31 March, 2018

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