The Hindu Business Line : BHEL bonus saga comes a cropper

Bland close
The share price of BHEL has moved up by about Rs 300 in the last three weeks
It's not clear whether BHEL received any communication from the Centre on bonus issue

Coimbatore , Aug. 14

The three-month-long saga as to whether the engineering giant BHEL would come out with a decision on bonus and stock split seems to be heading for a tame finish. The company notified the National Stock Exchange on Monday that its Register of Members would be closed between September 5 and September 15 for ascertaining the eligible list of members to whom notices would be sent convening the annual general meeting of the company and for payment of dividend.

From the NSE communication, it is clear that the agenda for the AGM does not include any discussion on the bonus/stock split proposal.The question assumes importance because there has been growing interest in the counter, particularly from late July when it was notified that the BHEL board would consider the two issues and it is not clear how the retail investors who may have taken position at the counter would be able to come out unscathed since the share price has moved up by about Rs 300 in the last three weeks.

Bonus news

It was on May 5, 2006 that the NSE notified on its Web site that it has written to the company seeking clarifications about the veracity of media reports on the subjectThe company, in its reply, stated that it has " ... . not received any communication from the Government as regards Bonus issue or stock split", thus dampening any hope of a `bonus' from BHEL.

Interest in the scrip gathered pace in late July when it was notified that the board would discuss on July 28 subdivision of the equity shares and issue of bonus shares.

Ambiguous response

But the suspense only deepened further when BHEL informed the Exchange that the " BoDs of the company in its meeting held on July 28, 2006, deferred interalia, the agenda item relating to issue of bonus shares and sub-division (split) of equity shares of the company for consideration at its adjourned meeting to be held on August 8, 2006".

But there was no announcement on this issue and BHEL later stated that it has "informed the exchange that the board of directors of the company in its meeting held on August 8 discussed the matter relating to spilt/issue of bonus shares and has not taken any decision in this regard" giving the whole issue a new twist.

But what happens to the investors who had bought shares of BHEL anticipating a decision on bonus and stock split? A look at the movement of the BHEL share price from July 26 to August 14 would give an insight into investor response to the expectations.

BHEL shares, which closed at Rs 1,858.90 in the NSE on July 26, have moved up to Rs 2,180.45 on August 14. Even if part of the increase in the share price was due to the rally witnessed by the overall market, the share had gathered momentum partly due to the bonus and stock split news.

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