Financial Daily from THE HINDU group of publications
Friday, Sep 26, 2003
Financial Daily from THE HINDU group of publications Friday, Sep 26, 2003 |
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Medical Institutions & Hospitals Corporate - Announcements Escorts puts off annual meet Our Bureau
New Delhi , Sept. 25 ESCORTS Ltd on Thursday announced the postponement of its AGM scheduled for September 30 to a later undisclosed date. While the company maintains that the postponement has been due to unavoidable procedural circumstances, the move is being seen with much interest in the market as it comes in the wake of Escorts' subsidiary, Escorts Heart Institute and Research Centre (EHIRC) proposing to change its status under the Companies Act. EHIRC has written a letter to the income-tax authorities in Chandigarh, where it is registered, stating its intent to convert itself into a company under Section 25 of the Companies Act with charity as one of its main objectives. A company official said that the move was meant to put to rest the controversy that had arisen following reports of the proposed disinvestment of equity in EHIRC to a Singapore-based entity, Merlion India Fund. A company registered under Section 25 of the Companies Act would not be able to distribute profits as dividends and has to plough the profits earned back into the company. The official pointed out that EHIRC has anyway not distributed any dividends in the past four years and has already been re-investing all the profits earned into the company. The offices of Escorts Ltd had been recently surveyed by the IT Department following reports that raised questions about the legality of the conversion of EHIRC from a charitable society into a company with limited liability in 2000. Industry sources point out that Escorts Ltd has been in talks with the Government at various levels following the IT surveys. Further, they said that if EHIRC does manage to convert under Section 25, it more or less puts to rest any possibility of Merlion buying stake in EHIRC. Market analysts, meanwhile, point out that the move by EHIRC taking cover under Section 25 would not pull the company out of the legal imbroglio. "The offence of the conversion of EHIRC earlier cannot be undone," an official from an investors association said.
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