Saturday, 1 October 2011
Unitech cancels dividend payout
Unitech cancelled the payment of dividend for the fiscal year ended March 31, 2011, claiming it had shareholders' approval for the decision.
At the annual general meeting, the shareholders "did not approve of the payment of dividend and the resolution for declaration of dividend on equity shares for the financial year ended March 31, 2011 rescinded," the real estate firm said a filing to BSE.
"The shareholders decided that the company should use it for business purposes given the current market situation," Unitech vice-president, corporate planning, R Nagaraju said.
The board of Unitech had proposed a dividend of 10 paise per share. The total dividend payout would have amounted to 30 crore, which will now be used to reduce debt and for other business purposes, said Nagaraju. Analysts said the company has been facing severe liquidity problems for the last six months, both because of problems that the entire industry is facing as well as the 2G issue in which its managing director Sanjay Chandra is lodged in jail.
"It has tied up some debt from a few banks in the last two months but the scale of their operations will require much more. Saving 30 crore by not paying dividend will not help," says an analyst at a brokerage firm, who tracks Unitech Ltd. He did not want to be named.
The company had also said that while its debt equity ratio is low, it will try to reduce its debt of 5,300 crore further. For this, it is looking at raising 300-400 crore this year by selling non-core land parcels and more later by selling its SEZs and IT parks.
"We intend to raise close to 500-700 crore every year for the next few years through sale of these assets. The target is a 10-15% reduction of debt on an annualised basis," Ajay Chandra, the current managing director of Unitech had told ET earlier.
At the annual general meeting, the shareholders "did not approve of the payment of dividend and the resolution for declaration of dividend on equity shares for the financial year ended March 31, 2011 rescinded," the real estate firm said a filing to BSE.
The board of Unitech had proposed a dividend of 10 paise per share. The total dividend payout would have amounted to 30 crore, which will now be used to reduce debt and for other business purposes, said Nagaraju. Analysts said the company has been facing severe liquidity problems for the last six months, both because of problems that the entire industry is facing as well as the 2G issue in which its managing director Sanjay Chandra is lodged in jail.
"It has tied up some debt from a few banks in the last two months but the scale of their operations will require much more. Saving 30 crore by not paying dividend will not help," says an analyst at a brokerage firm, who tracks Unitech Ltd. He did not want to be named.
The company had also said that while its debt equity ratio is low, it will try to reduce its debt of 5,300 crore further. For this, it is looking at raising 300-400 crore this year by selling non-core land parcels and more later by selling its SEZs and IT parks.
"We intend to raise close to 500-700 crore every year for the next few years through sale of these assets. The target is a 10-15% reduction of debt on an annualised basis," Ajay Chandra, the current managing director of Unitech had told ET earlier.
