HLL to consider bonus debentures

MUMBAI, OCT. 9. The Hindustan Lever board will consider issue of bonus debentures in the ratio of one fully paid debenture of Rs. 6 each for every equity share of Rs. 1 at its meeting on October 16.

An amount of Rs. 1,320 crores from the general reserve would be utilised for the issue and allotment of debentures, which would carry an interest rate of 9 per cent per annum, HLL said in a release here today.

Such issue and allotment of secured debentures would be considered as a `deemed dividend' under the provisions of the Income-tax Act and the company would bear and pay, in addition, dividend distribution tax at 10.2 per cent on the issue of bonus debentures from general reserve, it said.

Thus, a total amount of Rs. 1,455 crores would be utilised from the general reserve, it added. HLL said the debentures would be secured and redeemable at par in two equal instalments on the second and third year of the issue of debentures.

The scheme has been constructed to enhance the efficiency of the balance sheet in the context of excess cash carried for several years and was equitable for all shareholders, it said.

``This will not impair the company's ability to execute a large acquisition should an opportunity arise,'' HLL said.

Post board approval, the company would make necessary applications to the Mumbai High Court and obtain directions to convene shareholders' meeting to seek their nod, it added.

- PTI

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