When Union finance minister Yashwant Sinha had proposed in his budget for2000-01 to double the tax on distributed profits from 10 to 20 per cent, ahost of companies rushed to declare interim dividends for the year to March31, 2000, to beat the June deadline.

Just when the novelty had worn off, the Calcutta-based battery major said ina release on Wednesday that it has decided to declare an interim payout of25 per cent even before taking into account the anticipated financialresults.

By rushing ahead with interim payouts for the year to March 31, 2000, thecompanies expected to beat the implications of the modified Section 115-O ofthe Income-Tax Act, relating to the doubling of dividend tax.

The companies reportedly saved Rs 445 crore on taxes. Till April 2, nearly223 companies had announced interim dividends for the year to March 31,2000, making a payout of close to Rs 4,043 crore on unaudited net profits ofaround Rs 14,000 crore.

Just three weeks ago, Exide itself had announced an interim dividend of 32per cent for the year to March 31, 2000, in view of the anticipated profits.Underlining the decision to announce a 25 per cent interim for the currentfiscal, chairman and managing director SB Ganguly noted: "We took thisdecision looking at the available profits, since it is our endeavor alwaysto maximise the shareholder's return. It also reflects the confidence withwhich the company faces the future".

By the end of next month, Exide shareholders will get a total interim payoutof 57 per cent. It is understood the company will save another Rs 1 crore onthe proposed additional dividend tax by announcing an early interim payout.Analysts noted that Sinha should now read the writing on the wall -corporate India has totally rejected the higher dividend tax. India Inc iswilling to share the additional profits with its shareholders, but not thegovernment, the analyst said.

He felt that this novel and swift move by Exide Industries will open thefloodgates and other corporates with strong fundamentals and good prospectsin the current fiscal will be following suit and declaring interim dividendsbefore the May 31 deadline.

Exide has played it safe in view of the fact that if Sinha does not proposeto bring down the dividend tax announced in the budget in the next year.Another aspect, could be that the company is either expecting a tough yearor will shell out the 20 per cent dividend tax later, if it records profitshigher than its estimated profits.