The Board of Directors of Hinduja TMT Limited (HTMT), in its meeting held today, decided to declare an interim dividend of 50 per cent on its equity shares for the year 2001-02 subject to the stock exchanges accepting the record date of 26 March, 2002 as intimated to them.
However, that seems to be the problem. Getting stock exchange clearance that is. Especially considering the tough line that GN Bajpai, chairman of market regulator Securities and Exchange Board of India (Sebi) has taken on the issue.
No escaping the tax dragnet for companies this time round, Bajpai has stated while insisting the stock exchanges will ensure compliance. Bajpai, has been quoted as saying the stock exchanges have been instructed to disallow shorter notice period (than the current 30 to 42 day period) for interim dividend payouts, even though there had been instances of concessions allowed to companies in the past.
Dividends paid out after March 31, will be taxed at the receivers' end at rates applicable to them individually against a flat 10 per cent dividend distribution tax paid by companies.
Meanwhile, the HTMT board also approved two other proposals:-
To close the equity trading activity of the company with effect from 1 April, 2002 with a view to realising the ultimate objective of concentrating on its core business of information technology.
To merge Sarthak Mercantile Private Limited (SMPL), a special purpose vehicle of the Hinduja Group, holding equity stake in some of the HTMT's existing subsidiaries with HTMT from 1 April, 2002, subject to necessary approvals.
While the shareholding of HTMT in Aasia Industrial Technologies Limited, which controls the media subsidiaries of the Group, will go up from 51 per cent to 100 per cent, its stake in the Internet company In2Cable (India) will increase from 90 per cent to 100 per cent on account of the merger.
It may be observed from the Annual Report 2000-01 of HTMT that the Company had decided to defer the merger of SMPL, which would have increased the paid-up capital of HTMT to Rs 457.2 million from the present level of Rs. 355.8 million due to uncertain market conditions. However, SMPL shareholders have agreed to accept the revised swap ratio of the shares of HTMT and SMPL at 1:4 as against the earlier proposal of 10:21 in the interest of non-promoter shareholders of HTMT, who will stand to gain significantly because the promoter shareholding will now go up only by about Rs 50 million instead of Rs 100 Million as a result of the merger.
As regards closure of the equity trading activity, it is the logical culmination of the steps taken to phase out the company's finance activities, a release says.
