Institutions Scuttle Hfcl Dividend Proposal

Institutional shareholders led by the Unit Trust of India (UTI) have forced Himachal Futuristic Communications Ltd (HFCL) to drop the proposed dividend payout for 2000-01.

The rare incident of institutional shareholders opposing an ordinary resolution pertaining to payout of dividends on equity as well as preference shares took place at the company's 14th annual general meeting on Monday.

HFCL chief finance officer C K Ghosal said that UTI opposition got other institutional shareholders support as well. Institutional investors have a combined 14.64 per cent stake in the company.

Ghosal said the resolution, which proposed payout of 25 per cent dividend on equity shares and 12 per cent on preference shares, was subject to the permission of lenders. As UTI also has loan exposure in the telecom equipment maker, the company preferred not to declare dividend at the meeting, he added.

The withdrawal of the move would help HFCL save over Rs 29 crore. Of this, the promoters would have received nearly Rs 5 crore due to their 25.15 per cent holding.

The issued and subscribed share capital of HFCL consists of 7.8 crore equity shares of Rs 10 each and 81 lakh cumulative redeemable preference shares.

However, UTI chairman M Damodaran could not be reached for comments as he was "in a meeting". The official spokesperson was also unavailable.

The UTI opposition suggests that it is reassessing its exposure in the company. Rumours that UTI might divest its holding in HFCL have gained momentum with the recent announcement of the fund chairman that fund major was in the process of pulling out of some companies. However, none of the companies were named.

In an interview published in Business Standard on August 28 last year, Damodaran had said UTI was working on a three-pronged plan involving on transferring its shareholding in some companies to Life Insurance Corporation (LIC), selling its stocks in the open market if the concerned promoters did not want to buy them and offloading shares to shake up managements refusing to improve their functioning.

The chairman had said the first two steps were part of its flagship fund US-64's move to scale down its huge exposure in equities while the last one was aimed at inducing erring promoters to go by the books. US-64 has a 70 per cent exposure in equities worth Rs 12,800 crore in 1,100 companies.