NEW DELHI, July 15: The Delhi Stock Exchange (DSE) has initiated action against Inertia Industries Ltd for its failure to distribute dividend declared for financial year 1994-95. DSE has decided to take up the matter with the Securities and Exchange Board of India (Sebi) and the Department of Company Affairs (DCA) for necessary action against the company.

Interestingly, the company first declared a dividend but withdrew it at an extra-ordinary general meeting (EGM) about a year later. Confirming the DSE move, the exchange's executive director S S Sodhi said, ``We are writing to Sebi and DCA for taking necessary action against the company since it failed to pay the declared dividend within the stipulated 42 days of its annual general meeting.

''Under Section 207 of the Companies Act, 1957, directors of a company face simple imprisonment of up to seven days and a fine if the company fails to pay the declared dividend within the stipulated 42 days.

Inertia Industries, which had come out with a Rs 7-crore public issue at par in March 1994, held its first AGM on December 29, 1995. The company declared an interim dividend of 15 per cent for the year 1994-95 and followed it up with a final dividend of 2 per cent.

The company, which should have distributed dividends for 1994-95 latest by February 9, 1996 did not do so. In fact, during 1995-96, the company submitted the unaudited results for the six months ended September 1995 and March 1996.

The company declared a profit of Rs 2.39 crore for six month ended September 1995 as against Rs 4.53 crore for 1994-95.Similarly, for the six months ended March 1996, the company made a profit of Rs 1.63 crore, thus making a total profit of Rs 3.91 crore for 1995-96, which was only marginally lower than the profit for 1994-95.

However, on November 4, 1996, more than 11 months after the first AGM after going public, the company held an EGM in which it revoked the 17 per cent dividend. The EGM also resolved to revise the balance sheet and the profit and loss account for the year ended March 1996.The company stated at the EGM that Haryana government had imposed total prohibition in the state as a result of which the company has suffered heavy losses and the liquidity position of the company had also suffered.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.