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Friday, Mar 08, 2002

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Fiat sends cos scrambling

Suresh Krishnamurthy

THE SEBI fiat to stock exchanges to enforce the mandatory notice period for interim dividend record dates has had companies running in different directions.

Some, such as HDFC and Wipro have opted for the safe route of cancelling the dividends. Others, such as Thermax and Kabra Extrusiontechnik have chosen to overlook the SEBI fiat and announced their intention to declare interim dividend as late as Thursday. There is a third class of companies such as Hero Honda, which was one of the first off the block on March 1, setting its record date well in advance of the end of the financial year. The company has now changed the record date to March 30, to comply with the regulations. Meanwhile, what will happen to waivers already received by a few companies, especially from regional exchanges, continues to remain unresolved.

The companies that cancelled dividends or board meetings for consideration of an interim dividend were HDFC, Wipro, Punjab Tractors, Aksh Optifibre, Vysya Bank, EIH and Exide Industries. The Reliance group has also decided to seek directors' consent for revocation of the interim dividends announced earlier. Interestingly, these companies have not indicated the reason behind the rethink.

On the other hand, the board of directors of companies such as Thermax, Kabra Extrusiontechnik and Ema India have declared interim dividends after meeting on Thursday. This is despite the statements issued by the National Stock Exchange and the Bombay Stock Exchange that they will not waive the requirement of the mandatory notice period.

Hero Honda's move to reschedule the record date is thought to help its shareholders get the benefit of the lower tax incidence on dividends applicable for distributions made before March 31. Hero Honda was among 17 companies to have declared dividends or record dates on March 1.

As such, the other companies may also similarly benefit if they changed their record date. But then, they will have to beat the deadline of March 31 for payment of dividend. Fixing the record date on March 30 could pose considerable logistical difficulties in ensuring that the payment — posting the dividend cheques to the respective addresses — is made before March 31 to the names that appear on the register as on March 30.

It remains to be seen as to how the rest of the companies respond to the fast paced developments. There were around 150 companies which had come out with announcement relating to interim dividends between March 1 and 7.

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