Mumbai, Oct. 1: The Ahmedabad-based Shree Rama MultiTech Ltd has been forced to cancel its dividend of 30 per cent declared last year following an insistence by banks and financial institutions that the company clear their dues first.
Shree Rama MultiTech, which is among the top laminated tube manufacturers in the country, told stock exchanges today that an extraordinary general meeting will be held on October 26 to transact “the dividend at the rate of 30 per cent on the paid-up equity share capital of the company for the year ended September 30 2001, declared at the eighth AGM held on December 29 2001, be annulled”.
Shree Rama further informed that while the operational and financial performance of the company has been adversely affected, cash generation has been insufficient for servicing interest and other capital liabilities. Consequently, it has defaulted on payment of interest and principal to banks and financial institutions.
“The financial institutions have instructed the company to clear their outstanding dues before any dividend declared at the AGM held on December 29 is paid to the equity shareholders. However, Shree Rama has not been able to clear these outstanding dues till date. For reasons stated herein, the company is not in a position to pay dividend,” it said.
Shree Rama however, added that its management is committed towards reviving operations and turning around the company and has submitted a business restructuring plan to the banks/financial institutions. Negotiations for restructuring the debts of the company are progressing with the lenders and talks have reached an advanced stage.
The company also said it has received large long-term contracts from FMCG majors and targets are being met as per the orders.
It may be recalled that the company had come out with an initial public offering of Rs 165 crore earlier. The issue was hugely oversubscribed and the company mopped up more than Rs 6,500 crore, with reports attributing this over-subscription to investors mistaking it to be a technology company.
During the quarter ended June 30, the company posted net sales of over Rs 29 crore and a loss of Rs 24 crore.