Calcutta, Aug. 4: Tata Tea has sought shareholders’ approval to adjust miscellaneous expenses to the extent of Rs 41 crore against the share premium account as part of a financial restructuring exercise.
The accounting rejig, the firm says, will reflect its performance more accurately and boost shareholder value.
“Miscellaneous expenses of Rs 41 crore were not amortised in our accounts on March 31 this year. Of this, Rs 25 crore was accounted for by the voluntary retirement scheme and the remaining Rs 16 crore came from pension/gratuity liabilities. The expenditure is being amortised over the next few years,” a senior official of the company said here today.
The official pointed to the swelling share-premium account, which he claimed can be used to set off miscellaneous expenditure under the Companies Act, 1956.
The company is the third in the Tata group to have resorted to this accounting shuffle after Tisco, which did it twice in the past, and Telco, which adopted it once.
The company implemented an early separation scheme (ESS) for all its employees, except those working in plantations, during the quarter ended September 30, 2002. That cost is being amortised over 60 months.
Tata Tea was able to refinance the entire debt outstanding in Tata Tea (GB), the special purpose vehicle that holds 100 per cent of the Tetley Group’s equity.