Recovery of Piramal Enterprises Shares from IEPF - Make You a Crorepati

Can Recovery of Piramal Enterprises’ Shares from IEPF Make You a Crorepati?

Do you think five hundred shares of a company can make you a Crorepati? No, it is not a scam sales ad that you may find on the internet these days. If you or your elders have bought five hundred shares of Piramal Enterprises Limited in 1990, then the value of those shares in today’s date is worth above crores.

History of the Company

Piramal Enterprises Limited (PEL) boasts diversified businesses, like financial services and working in pharmaceuticals. PEL’s financial services offer a variety of monetary solutions and products related to retail and wholesale financing. The wholesale lending business provides financing to land developers, also as corporate clients in non-real estate sectors. Within its retail-based lending structure, PEL lends housing loans to its customers and is working on creating a multiproduct retail lending platform. The PIL corporate house also offers India Resurgence Fund (IndiaRF) as part of its financial business. it is a distressed asset investment platform, which invests in equity and/or debt across non-real estate sectors. The Piramal Pharma Limited (PPL), which is a subsidiary of PEL, offers a portfolio of services and products with its end-to-end manufacturing capacity. Piramal Pharma is part of a complex hospital generics business, has an integrated contract development and manufacturing facility, an Indian consumer products business, and selling over-the-counter products in India.

Even during the setback of the COVID-19 pandemic, it continued to get profits and supply dividends to its investors. For the primary three quarters of the year 2020-21, the shares of Piramal Enterprises Limited have provided impressive dividends to its shareholders. for instance, if there are 50 shares in your name, bought in 2008, then even by keeping the bonus dividends aside the corresponding values would are really high.

  • Value of fifty shares in Jan 2008 at Rs. 313 per share is 15650.
  • Value of equivalent shares in Feb 2021 at 1515 per share is 75750.

The corresponding increase in value is 400% approximately (that too considering no bonus shares or dividends).

Now considering the share splits offered by the corporate, it’s alright to be confused at this stage on how just 500 shares of the company gives a dividend of more than 1 Crore Rs. It should have led to an income of just equivalent price value. This happens in the case when the corporates are generous enough to issue huge amounts of bonus shares to their shareholders. You heard it right! Piramal Enterprises Limited has issued an enormous amount of bonus shares to its shareholders. the subsequent calculation will illustrate how the 500 shares yielded the value of ₹ 1, 07, 10, 000, and the way they’re worth above one Crore today.

Calculation

  • Suppose you purchased 500 shares of Piramal in 1990.
  • In 1991, the corporate-issued bonus shares within the ratio of 1:1.

[Bonus Shares are issued by the corporate to its shareholders as fully paid up shares with no cost. In other words, the corporate by issuing bonus shares gives a present to its shareholders].

Issuing bonus shares at a 1:1 ratio means for each 1 share owned by a shareholder, the corporate will issue another share in his name. this suggests that if you had 500 shares within the beginning, it’s now become 1000 shares, i.e., 500 shares + 500 Bonus Shares.

  • In 1993, the Piramal company again issued the bonus shares within the ratio of 1:2. Now, for every 2 shares a shareholder-owned, the corporate issued another share. Therefore, the 100 shares in your name have now become 1500 shares.
  • Now, since 1993 the values of these have kept increasing and thus with the added bonus shares issued by the corporate the corresponding increase in price is large .
  • 10 years down the road , the corporate , in 2004, thanks to an extreme rise in its share price, break up its stock within the ratio of 1:5 and in 2005 in 1:920. In 2018 it again splitted its shares by 1/600 and followed it up by 1/420 split in 2019.

[A company splits its stock when the share price of the share increases to an excellent extent and it becomes difficult for the retail investors or small investors to take a position within the shares of such companies. By splitting the stocks, the corporate increases the number of shares within the market while decreasing its price by an equivalent proportion. during this way, there’s no change within the net value of the market capital.]

The same thing happened with Piramal Enterprises Limited. Its stock price skyrocketed and was trading at the worth range of ₹ 750 per share. it had been becoming difficult for retail investors to shop for the company’s stocks. Therefore, Piramal Enterprises did the split at the ratio of 1:5. this suggests that for each share, the shareholder got 5 shares, worth 1/5th of the first 1 share. this suggests that, earlier, if you had 10 shares of ₹ 5, 000 each, then now you’ve got 50 shares of ₹ 1000 each. Thus, no change within the net value of the shares worth ₹ 50, 000.

Due to the split of 2004, now your shares increased from 1500 to 7500.

P.S.: Don’t confuse it with Bonus Shares. Because unlike Stock Spilt, the worth per share doesn’t decrease while issuing Bonus Shares.

  • Now, the worth of 1 share of Piramal Enterprise, as of December 2020, is ₹ 1428. Thus, the worth of your shares as of date (without considering other share splits is)

₹ 1428 x 7500 shares = ₹ 1, 07, 10, 000 (One Crore Seven Lakhs Ten Thousand).

  • The above amount is merely the worth of the shares. we’ve not calculated the dividends that you simply have received thus far .
  • Piramal Enterprises Limited is understood for paying its investors generously. To date, the corporate has paid tons of dividends too.

Source: https://in.investing.com/equities/piramal-healthcare-company-profile

Now you’ll calculate your dividends accordingly.

So, if you had invested money in buying just 500 shares of Piramal in Piramal Enterprises Limited in 1990, then you would have became a Millionaire by today’s share prices. Now the difficulty is that you simply aren’t within the possession of the shares of Piramal Enterprises, though you recognize that you are simply the rightful owner of the said shares. As per the Government’s rule, these shares are now treated as forgotten shares because nobody has claimed dividends for seven years or more. Since the dividend remained unclaimed, the shares are now within the possession of the govt of India under the Investor Education and Protection Fund (IEPF). it had been introduced in 2016 by the govt to resolve the difficulty of such ‘long lost and forgotten shares’.

Overview of Investor Education and Protection Fund

As mentioned, IEPF was introduced by the Indian Government to ensure a caretaker for the unclaimed dividend and unclaimed shares on behalf of the rightful owners of shares. People usually forget that they own shares of a company which is the reason why the dividends on such shares remain unclaimed for years or decades. The rationale to ditch the existence of such shares can be any of the following:

  • Investors tend to forget to appoint a nominee for his or her shares. After their death, their heirs remain clueless about their ownership of such shares, and therefore the shares remain deserted.
  • The amount of investment is so small that the investor forgets about it.
  • Shares might become a reason for the family dispute of ownership and remain without ownerless till the decision of the court.

There might be another reasons also that would cause investors forgetting about their shares. thanks to this, many companies have shares that roll in the hay them with none sign of ownership.

Before the introduction of the IEPF, such unclaimed dividends and unclaimed shares were transferred to the govt funds which were employed by the govt for various public welfare schemes and developmental works. When the people started claiming their dividends and asked to refund their shares, the govt decided to line up IEPF. it’s a medium that gives the general public to approach it and claim their dividends and ask to refund their long-forgotten shares. they will claim their dividends and shares by applying to the managing authority of the fund manager. thanks to the establishment of IEPF, people don’t got to approach separate companies to acquire their dividends and shares.

Acts Governing IEPF for Regulation

The Companies Act, 2013 and Investor Education Protection Fund (IEPF) Authority (Audit, Accounting, Transfer and Refund) Rules, 2016 regulate the functioning of IEPF. These laws state that after a corporation declares its dividend, the shareholders get 30 days to say the dividend. If the shareholders fail to say, then the corporate is forced to transfer such unclaimed dividend to a special account, opened within the name of the corporate, called ‘Unpaid Dividend Account’.

The company, within 90 days of transferring the quantity to the ‘Unpaid Dividend Account’, has got to publish an inventory of all the shareholders alongside their unclaimed dividend on their website. then, a shareholder has got to file an application of claim to the corporate for the payment of the unclaimed dividend. If the dividends remain unclaimed for a consecutive period of seven years, then the corporate is obliged to transfer the unclaimed dividend to the IEPF. Once the 7-year period of time gets over, the shares also get transferred to the IEPF, along side the dividend amount.

Note: The shares transferred within the name of the IEPF are the shares on which the dividend has been declared by the corporate, but the shareholder has did not claim an equivalent for a consecutive period of seven years.

Unclaimed Dividend/Shares of Piramal

We can see the transfer status of the unclaimed dividend and unclaimed shares to the IEPF from the Annual Reports of a corporation.

Funds & Shares transferred to the IEPF

According to the Annual Report 2019-2020 of the company, Piramal Enterprises has transferred the following unpaid dividend and unclaimed shares to the IEPF during the Financial Year of 2019-20:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2018-19.pdf

Following are the reports for seven financial years before that:

Financial Year of 2018-19:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2018-19.pdf

Financial Year of 2017- 18:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2017-18.pdf

Financial Year of 2016 – 17:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2016-17.pdf

Financial Year of 2015-16:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2015-16.pdf

Financial Year of 2014 – 15:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2014-15.pdf

Financial Year of 2013 – 14

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2013-14.pdf

Financial Year of 2012 – 13:

https://www.piramal.com/wp-content/uploads/2020/10/Equity-Unclaimed-Dividend-FY-2012-13.pdf

The company in the previous financial years has transferred huge amount of money along with dividends related to shares to the IEPF.  The company has transferred this amount continuously in previous years and also released advertisements in the newspapers asking their investors to recover their dormant money. The number of unclaimed lost shares transferred to the IEPF are worth crores of rupees. PEL corporate house has a huge chunk of unclaimed shares which is transferred to IEPF every year. The shareholders are advised to look into their investment history, or the ownership of shares passed on from a deceased family member and claim their dividends and shares from IEPF. The shareholders must regularly check the newspaper advertisement and corporate information section of Piramal Enterprises to know the status of pending shares.

Funds to be transferred to the IEPF

The Annual Report 2019-2020 gives investors the details of their shares with the amount which has been transferred to the IEPF. It also provides the amount of outstanding unclaimed dividends that have been transferred with the names of shareowners. The shares mentioned in the report have crossed date to make a final claim directly to the company. Hence, Piramal Enterprises Limited is forced to transfer the outstanding amounts of dividends, along with the shares, to the IEPF.

Annual Report Link:

https://www.piramal.com/wp-content/uploads/2020/09/PELl_AR_20-07_final.pdf

The report above gives complete details of the shareholders of Piramal Ltd. whose dividends have been transferred to IEPF. An investor can apply to the IEPF’s website and subsequently contact the nodal officer of Piramal through contact details mentioned at end of this blog to process their application.

An investor can check the status of their unclaimed dividend, declared by Piramal Ltd., from https://www.piramal.com/investor/shareholder-information/unclaimed-dividend/

Dormant Shares/Lost Dividends under IEPF

What happens to the shares and therefore the dividend transferred to the IEPF? Will you lose all of your dividend income along side your shares?

A shareholder, before the introduction of IEPF, wont to lose his rights over the dividend amount and therefore the shares once they were transferred to the govt funds. But now, with the introduction of IEPF, a shareholder doesn’t lose his/ her right over the dividend and therefore the shares. However, companies still urge their shareholders to say their dividends before the shares enter IEPF. the rationale behind this is often that the procedure of claiming the refund of dividend and therefore the shares from IEPF is extremely time-consuming. IEPF takes an extended time to refund the quantity and shares to the rightful owner because it wants to be 100% sure that the dividend and shares are given to the rightful owners only. thanks to this, they carefully scrutinize the applications before giving their approval of the transfer. this is often why Piramal Enterprises Limited advises their investors to say their dividend from the corporate by applying to the Company’s Registrar or the agency, instead of claiming the refund of shares and therefore the dividend amount from the IEPF. For this purpose, the Nodal Officer, appointed by the corporate under the principles of IEPF, is Mr. Bipin Singh, Company Secretary. One can also contact the Piramal Nodal officer on [email protected]

Why Does an Investor Need Legal Help?

The procedure to file an application for the refund of unclaimed dividends and lost shares to the IEPF Authority may be a tricky and tedious task. Hiring a jurist will ease out your process of filing the appliance. Application filing to IEPF requires a particular degree of technical knowledge. The advocate/legal expert will make sure that the appliance contains no mistakes and thus, helps to avoid the probability of it getting rejected. He will do all the tasks; from collecting the knowledge from the corporate about the dividend and shares to filing the said application.

The legal/financial expert can also assist you to urge your shares that are involved during a family dispute. As stated above, when a shareholder dies without appointing a nominee for its shares or doesn’t draft a will on what is going to happen to its shares after his death, then all the relatives of the deceased shareholder come to say their share within the deceased’s property, a.k.a., shares during this case. I mean who will leave the shares of Piramal Enterprises Limited worth more than One Crores. No one, right! No loved one of a dead person will want to abandon the shares of Piramal Enterprises Limited (PEL) that were bought by his elder before 1990. Thanks to these reasons, a claimant requires the assistance of a legal professional or a legal firm to manage all such disputes associated with ownership of the shares. A jurist knows all the laws and nitty-gritty round the loopholes regarding the partition of the family assets, therefore, he can provide you with the simplest deal possible.

To conclude…

As we’ve seen, Piramal Enterprises is extremely generous in issuing bonus shares to its shareholders from time to time. Thanks to this generosity, the 500 shares bought before 1990 could give returns well above one crore rupees. And as we all know, the worth of the shares has increased manifold. Thus, if you only came to understand the existence of such shares in your name, then it is perhaps the best time to redeem them, along side the dividend accumulated over time. Getting more than One Crore rupees, out of the blue is nothing but winning a lottery. It is advised that you simply check the data/links provided above and find the expiry date by which you’ll claim the dividend from Piramal Enterprises Limited (if it is not transferred into the IEPF already), then apply for the dividend claim as soon as possible. You might need to apply to the Nodal/ Deputy Nodal Officer of the corporate in case the amount is already transferred to the IEPF. If your dividend amount and shares are already transferred to the IEPF, then find a financial consultant as soon as possible, and apply to the IEPF Authority for the refund of the unclaimed dividend and therefore the recovery of the transferred shares. Hiring a legal consultant also will assist you to fight for the shares stuck in any a legal dispute with other relatives.

 

By | 2021-02-19T17:46:57+05:30 February 19th, 2021|Debt Recovery Firm|0 Comments

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