Business Daily from THE HINDU group of publications
Thursday, Sep 25, 2008
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Business Daily from THE HINDU group of publications Thursday, Sep 25, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Markets
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Stocks Our Bureau Ahmedabad, Sept. 24 Amid a clear discontent among shareholders at the annual general meeting of Gujarat Mineral Development Corporation Ltd, the resolution to keep aside 30 per cent of its profit before tax was passed with a majority. The Gujarat Government had recently "proposed" PSUs to part with 30 per cent of their PBT in favour of Gujarat Socio-Economic Development Society, a newly registered body. Six of these PSUs are listed companies. On September 11, following GMDC shareholders' protest against this proposal, stock prices of the profit-making company, in which the State Government holds 74 per cent, had plummeted, as was the case in other companies also. The Bboard meeting of GMDC had been postponed till today after this protest. "Up to Rs 122.52 crore, which is 30 per cent of financial year 2007-08's PBT, will be the upper limit set for which we will fund projects, but only after they are approved by the Central Board of Direct Taxes. "Under Section 35 AC of the Income-Tax Act, we will get 100 per cent tax exemption on the amount we give for charitable purpose," said Mr Kulshrestha, General Manager, Finance, talking to presspersons reporters after the much-awaited stormy AGM. He explained that if charitable proposals worth Rs 122.52 crore got approved, the company would save Rs 41.48 crore in tax exemption and need to pay only Rs 81 crore in reality. Around 33.99 per cent is the tax the company pays. Ms Vijay Lakshmi Joshi, Chairperson, tried to pacify the shareholders by saying that this was an "enabling" and not a binding proposal put forward by the Gujarat Chief Minister, Mr Narendra Modi. Although the proposal was "acceptable" as the Government held sovereign rights over the PSU, shareholders were clearly disappointed at the meeting. A representative of UTI Mutual Fund said, "Our bank is unhappy with the proposal and we do not support it." Many others vowed to go to the High Court for justice. Mr Vallabh Bhai, a shareholder said, "The stocks are plummeting and the MoUs announced by the company with KSK and other power-generating companies are not seeing the light of the day. Instead of giving 30 per cent to GSEDS, the company could have paid dividend to the shareholders." `Unjust move' Mr P. Shah, shareholder, said this move was unjust to the shareholders and they would not have raised questions if the balance sheet showed Rs 5,000 crore worth of profit. The sudden plunge in share prices is an indication of the people's declining faith in investing in PSUs due to this proposal. The company's stock scrip on Wednesday was down 2.63 per cent at Rs 151.9. The shares were trading on the BSE at Rs 241.2 on September 2.More Stories on : Stocks | Investor Protection | Minerals
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