A

SYNOPSIS REPORT
ON
DIVIDEND DECISION
AT
ICICI BANK LTD
Submitted
By
Y. PAVAN KALYAN
H.T.NO: 130420672071
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA POST GRADUATE COLLEGE
PEERZADIGUDA

(Affiliated to Osmania University)

2020-2022
 AURORA POST GRADUATE COLLEGE
PEERZADIGUDA

Department of Management

SYNOPSIS

Title of the Project : DIVIDEND DECISION

Student Name : Y. PAVAN KALYAN

Hall Ticket Number : 130420672071

Signature of the Student :

Signature of the Guide :

1.1 INTRODUCTION

Dividend is a portion of the company’s earnings to be a distributed to its shareholder , based

on board of director’s decision .dividends are quoted as dividend per share (DPS) or

dividend yield. Most of the companies having stable and secure growth offer dividends when

their share prices become stagnant. However, several companies don’t offer dividends as all

profits are reinvested to ensure faster, better than average growth. The term Dividend refers

to that part of the profit of a company which is distributed amongst its shareholders. It may

therefore be defined as the return that a shareholder gets from the company, out of its profits,

on his shareholders. According to the Institute of Charted Accounts of India” dividend is a

“Distribution to shareholder out the profits or reserves available for this purpose”.

The Dividend policy has the effect of dividing its net earnings into two parts: Retained

earnings and dividends. The retained earnings provide funds to finance the long term growth.

It is the most significant source of financing a firm’s investment in practice. A firm, which

intends to pay dividends and also needs funds to finance its investment opportunities, will

have to use external source of finance .Dividend policy of the firm. The theory of empirical

evidence about the dividend policy does not matter if we assume a real world with perfect

capital markets and no taxes. The second theory of dividend policy is that there will

definitely be low and high payout clients because of the differential personal taxes.

The majority of the holders of this view also show that balance, there will be preponderous

low payout clients because of low capital gain taxes. The third view argues that there does

exist an optimum dividend policy. An optimum dividend policy is justified in terms of the

information in agency costs.

It is the reward of the shareholders for the investments made by them in the shares of the

company. It refers to the policy that the management formulates in regard to earnings for
distribution as dividends among shareholders. It determines the division of earnings between

payments to shareholders and retained earnings.

Dividends as a basis for value. Help determine the value of stocks. Individual investors buy

stocks expecting return from dividends and the eventual selling price of stock. Today’s price

represents the present value of those future expected cash flows.

From the whole market view the price of stock today is the present value of the infinite

stream of dividend.
1.2 NEED OF THE STUDY:

The dividend policy of a firm determines what proportion of earnings is paid to shareholders

by the way of dividends and what proportion is ploughed back in the firm for re investment

purposes. If a firm’s capital budgeting decision independent of its dividend policy, a higher

dividend payment will entail a greater dependence on external financing. On the other hand,

if a firm’s capital budgeting is dependent on its dividend decision, a higher payment will

cause shrinkage of its capital budget an vice versa. In such a case the dividend policy has a

bearing on the capital budgeting decision any firm, whether a profit making or non-profit

organization has to take certain capital budgeting decision.

1.3 OBJECTIVES OF THE STUDY:

 To know the various dividend policies followed by the firm.

 To study the importance of the dividend decision and their impact on the firm’s

capital budgeting decision.

 To analyze whether the dividend decisions have an impact on the market value

of the firm’s equity.

 To know the various dividends polices of the industrial credit and investment

corporation of India

 To interpret the various theories of dividend with reference to their assumptions

and conclusions.
1.4 SCOPE OF THE STUDY:

Dividend decision a firm distributes all profits or retain them or distribute a portion and

retain the balance with it. Which course should be allowed. The decision depends upon the

preference of the shareholders and investment opportunities available to the firm. Dividend

decision has a strong influence on the market price of the share. So the dividend policy is to

be determined in terms of its impact on shareholders’ value. The optimum dividend policy is

one which maximizes the value of the share and wealth of shareholders. The financial

manager should be determined the optimum payout ratio that is the proportions of net profit

to be paid out to the shareholders. The study is limited for 5years i.e., 2017-2021
1.5 RESEARCH METHODOLOGY:

Data sources: The study is based on secondary data. Secondary data collected from annual

reports and also existing manuals and like company records balance sheet and necessary

records. The sources of information are classified to two primary and secondary data. The

data collected by the researcher and agent known to the researcher, especially to answer the

research question, is known as the primary data. Studies made by others for their own

purpose represent secondary data to the researcher.

Secondary sources can usually be found more quickly and cheaply than primary data

especially when national and international statistics are needed .Similarly data about distant

places often can be collected more cheaply through secondary sources. The data used for this

study is mostly secondary data .The information regarding the financial data of the past five

years has been collected from the various website journals, websites like www.icici.com etc.
TOOLS USED IN DIVIDEND DECISIONS

Total dividends paid

 Dividend per share = --------------------------------------

Total number of shares in use

Net income – preferred dividend

 Earnings per share= -------------------------------------------

Weighted average shares holding

Net income – preferred dividend

 Return per share = ---------------------------------------------

Weighted average shares holding

Market value per share

 Price earnings = ----------------------------------

Earnings per share

 Profit after tax = Operating income×(1-tax rate)

 Net worth= Total assets-Total liability

LIMITATIONS:
Every research conducted has certain limitations. These arise due to the method of sampling

used, the method of data collation used and the source of the data apart from many other

things. The limitations of this study are as follows:

The data collected is of secondary nature and hence it is difficult to ascertain the reliability of

the data.

 The scope of the study has been limited to the impact of the dividend on the market

value of the firm’s equity. Others factors affecting the firm’s market value have been

assumed to have remained unchanged.

 The period of the study has been limited to only five years.

 The method of sampling used is ‘judgment sampling’ hence the choice of the sample

has been left entirely to the choice of the researcher. This has led to some amount bias

being introduced into the research process.