Friday, October 30, 2009

Why this company is hesitant in paying dividend?

The company I am talking about is "Compact Disc India".

The company first calls for a meeting on February 20, 2006 to consider dividend. The decision to recommend 10% interim dividend was differed in the meeting till the next meeting on 23 March 2006. The meeting on 23 March 2006 was postponed. That meeting never happens.

The company again called for a meeting on 30 May 2008 to consider dividend. The company forgot to inform about any decision taken on dividend in the outcome of the meeting. The updates were communicated to the exchange that the dividend will be discussed in AGM. The company again called for a meeting on 22 August to consider dividend. The board did declare a dividend along with a Shareholders welfare fund worth 50 lacs which will provide interest free loans for personal use to those shareholders who are holding the shares of the company for last 10 years. There was no mention of the word dividend till the next year.

The company called for a meeting on 20 January 2009 to declare interim dividend. The meeting was adjourned on 16 February 2009 and never happened.

The company called for declaration of dividend again on 28 August 2009. The company declared a dividend in the meeting on 4 September 2009. When the AGM was held, the company deferred the declaration of dividend as "in Agreement executed by the company with its bank (lender), the company has to take prior approval of the bank before declaring the dividend." The company again issued a clarification that the dividend declaration was deferred.

Now the company has called again for an EGM to be held on 30 November to declare a dividend in a notice given on 24 October 2009.
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Jaimin said...

I have a slightly broader question, and would be obliged if someone throws some light. I find it very surprising that the market has not appreciated the stock price of a company that has an impressive growth rate, and has consistently been increasing its EPS for the past 3-4 years. It makes a good case for value investing. So what is the reason that the stock price remains around 60-65? Is it only because the company outsources from the US, and the US is still getting out of the woods?

Unknown said...

I think there are still some lingering doubts on the veracity of the numbers the company reports.

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