Mayawati, CBI gets notice from Supreme Court on plea to lodge fresh FIR

Indirectly referring to its 2012 verdict by which it had quashed the DA case against Mayawati merely on technical grounds the Supreme Court said that CBI should have got proper advice and acted on that basis

The Supreme Court on Friday issued a notice to Bahujan Samaj Party (BSP) chief Mayawati and Central Bureau of Investigation (CBI) on a plea for registration of a fresh first information report (FIR) against BSP supremo. This notice was issued more than one-and-a-half years after the apex court quashed the disproportionate assets (DA) case against Mayawati.


A three-judge bench headed by Chief Justice P Sathasivamm while holding that CBI should have got proper advice for registration of a fresh case against her after the apex court quashed the FIR on technical ground, sought response from the former chief minister of Uttar Pradesh (UP) and the agency within four weeks.


The bench brushed aside the stiff opposition put forward by senior advocate and BSP member Satish Mishra who opposed the plea, saying it is politically motivated.


"We expected that CBI should have got proper advice and acted on that basis," the bench said, indirectly referring to its 2012 verdict by which it had quashed the DA case against Mayawati merely on technical grounds and leaving the option open to the agency to lodge a fresh case against her.


"It is not for the court to pass order on every aspect," the bench said.


"Is it always the duty of the court to direct CBI," the court asked.


By its July 2012 verdict, the court had quashed a nine-year-long DA case against Mayawati on the ground the agency proceeded against her without properly understanding its 2003 orders which were confined to the Taj Corridor case relating to release of Rs 17 crore by UP government allegedly without sanction.


Thereafter, in May 2013, while reserving its decision on a plea seeking review of its July 2012 judgement, the apex court had clarified that its earlier verdict has not taken away CBI's power to proceed against her in a separate DA case.


On 8 August 2013, the apex court had declined to review its judgement quashing the DA case against her.


Understanding the role of dividends for investment decisions

Reinvesting dividends makes sense if the requirement of money is not immediate, and dividend should be used for liquidity management

The extra-ordinary dividend of Rs29 per share announced by Coal India has brought the word, ‘dividend’ to limelight once again. This is not for the first that time dividend has hogged headlines. Recently, Strides Arcolab issued dividends, which looked like a company winding up its operations and distributing the entire money to shareholders.
The Strides Arcolab announced Rs500 per share dividend. Investors have often chased high dividend yield shares. Historically, much has been written about dividends and its significance under different approaches, from dividend discount model to Miller-Modigliani approach.

So what does dividend mean for investors and how should investors analyse dividend in the process of investing?

The first step in understanding dividend is to understand the dividend policy of a company. The dividend policy will help an investor get an idea about what kind of dividend he should expect from the company. While every company many not have a well documented dividend policy, many investor-friendly company have these policies in place and an investor must go through this policy to understand what to expect from the company. Even in cases where a company does not have a well drafted dividend policy, past trends can give a good indication of what to expect from the company. Here are details of some companies which have a well drafted dividend policy.

Name of the Company

Dividend Policy

Profit making Public Sector Undertaking

As per the guideline dated February 11, 1998 from the Government of India, all profit-making PSUs which are essentially commercial enterprises should declare the higher of a minimum dividend of 20% on equity or a minimum dividend payout of 20% of post-tax profit. The minimum dividend pay-out in respect of enterprises in the oil, petroleum, chemical and other infrastructure sectors such as us should be 30% of post-tax profits.


HDFC Bank has had a dividend policy that balances the dual objectives of appropriately rewarding shareholders through dividends and retaining capital in order to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record of moderate but steady increases in dividend declarations over its history with the dividend payout ratio ranging between 20% and 25%.

Infosys Ltd.

Currently, Infosys pays dividends to its shareholders. The current dividend policy is to distribute not more than 30% of the PAT (consolidated Indian GAAP) as dividend. The Board of Directors reviews the dividend policy periodically and on 15 April 2008 decided to hike the dividend policy to up to 30% of post-tax profits from 20% of post-tax profits earlier


CRISIL believes in maintaining a fair balance between cash retention and dividend distribution. Cash retention is required to finance acquisitions and future growth, and also as a means to meet any unforeseen contingency. CRISIL has also been conscious of the need to maintain stability in its dividend payout over the years. From 2008, CRISIL has commenced the practice of paying dividend on a quarterly basis.

Larsen and Toubro

The board of directors reviews the dividend policy periodically. L&T pays a dividend because the company’s investors in India and abroad view this as an important market signal of the management’s confidence in the future.

Source: Websites of respective companies

After having understood the dividend policy, an investor needs to understand how the dividend decision of a company impacts its share price. Very often, after an extra-ordinary dividend is announced, the concerned company’s share prices tend to go up after the announcement. Coal India shares experienced this. While this may not hold true in all cases, a company surprising investors with dividend on positive side tend to add value for investors in share price in many cases. Some of the theoretical approaches on the significance of the dividend confirm the positive influence of dividend on share price. MJ Gordon, in his dividend discount model (also known as Gordon growth model) believes that paying large dividends reduces risk and thus influence stock price, while another analyst Baskin (Baskin, 1989) says dividend is a proxy for the future earnings. An investor also needs to pay attention to dividend yield which is a relationship between dividend per share and the price of the share. Here also an occasional high dividend yield may not serve much purpose and consistency once again is the key.

Another important aspect that an investor needs to understand is where to deploy dividend proceeds. Ideally dividend can be utilized for meeting working capital requirement of one’s life. While reinvesting dividend makes sense if the requirement of money is not immediate, dividend should be used for liquidity management by an individual. In case of companies which have well drafted dividend policy, cash flow from dividend is relatively stable and helps in financial planning process. Along with other intermittent cash flows such as coupon or bank interest, an investor can combine money received from dividend to plan his finances well.

(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)


Will Pakistan grant the ‘Most favoured Nation’ status to India?

If details can be worked out, there could be substantial trade with Pakistan via the land border at Wagah, instead of indirect trade through UAE

Just about twenty years ago, in 1996, India extended the ‘Most Favoured Nation’ (MFN) status to Pakistan, and it was expected that they would reciprocate this gesture soon thereafter. They have not done so, and every time this issue is raised, they have a different story to tell.


The trade with Pakistan, if there was the will and a friendly political and commercial atmosphere, could have been substantial. Instead, Pakistan’s exports to India have reached $327.496 million, while imports have gone up to $1809.867 million last year. A lot of goods that India ships to the UAE actually find their way to Pakistan, by Dhows, procured locally and shipped back to Karachi. There are a lot of goods and services that both can each offer each other, but that's not happening, more for political reasons than anything else.


Political talks start and end on the subject of Kashmir and the leaders' claim that they had "almost" come to a settlement on this highly debateable issue remain a distant dream. Now, the present excuse is that, let the new government in India tackle the issue, when it comes to power after elections in May 2014. So be it!


During his brief stay to attend the South Asian Association for Regional Cooperation (SAARC) business conclave, it is expected that Khurram Dastgir Khan will be meeting Anand Sharma, India's commerce minister, and the main topic is likely to be the issue of MFN, which according to the media, though signed in 1996, gives "market access", as stated by Khan. In addition, he has an agenda to cover, which includes greater visa facilities for business to grow and trade to flourish.


There is no doubt that the fact remains obtaining visa, to visit either of the countries, is a thorny issue, due to inordinate delays, at both ends.


It may be recalled that there was a proposal to supply electricity to Pakistan via the northern grid (at that time, when single national grid had not come into being) and a Pakistani delegation was to come to India and finalise the matter, soon after Nawaz Sharif became the prime minister. This was cancelled by Pakistan and there has been no further talk on the subject.


There are other issues such as need to abolish the negative list in Pakistan and reduction of non-tariff barriers on the Indian side, which was signed in 2012, but both have to implement them!


In fact, if details can be worked out, there could be substantial trade via the land border at Wagah, instead of a sea route.


It is imperative that, when the new government is formed after the elections in India, a serious review must take place to strengthen relations with all countries, and special attention should be paid to develop even closer trade relations with not only Pakistan, but Bangladesh, Myanmar and Sri Lanka.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




3 years ago

Already 18 years have passed since India has given MFN status to Pakistan,& still we didn't wont to grow up & wait for them like a fool.I feel We are already Most Favoured Nation for creating problems by them.

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