Recovery of Unclaimed Shares of BATA from IEPF - Muds Management

Recovery of Unclaimed Shares of BATA from IEPF

If you have shareholdings of the Bata India Ltd. or your father or grandfather have old physical share certificate of the company then this blog will be an important read for you. This blog is also for understanding the difference between unclaimed shares and dormant shares.

The old shares of Bata can fetch huge profits for an investor but should understand the whole process to claim them. With the current provisions of the government in place, an investor might need to raise the claim for dividends related to old shares with IEPF. In the following sections, we will study the history of Bata India Ltd. its share growth. We will also demonstrate its share growth by taking an example of a hypothetical investment. We will follow this up with some data about dividends released by the company over two decades and then study the IEPF and its share claim process.

History of Bata India Limited

Bata India Limited is a company known for its business of producing high and middle-range footwear and its trading throughout India. The company also sells various accessories through its pan India network of retail and wholesale units. The company is also into the development of surplus property in the real estate segment of the Indian Market. Its footwear manufacturing and the trading segment are responsible for carrying out the production of various types of footwear or all price ranges. The segment is also responsible for the manufacturing of various accessories and their sale in the market through its retail and wholesale outlets. Its surplus property development arm is responsible for developing surplus property at the place named Batanagar in India. Its retail outlet network comprises over 1,200 stores spread across all major cities in the country. It also has an operating network of non-retail distribution networks which operates through its urban wholesale division and caters to a variety of customers through almost 30,000 dealers. The accessories offered by the company for women include handbags, clutches and scarves, belts. For men, its accessories collection contains shoe care products, belts, and wallets. Its brands include Bata, Bubblegummers, Bata Comfit, Hush Puppies, Weinbrenner, Power, Power,  and Naturalizer.

Over the years of its operation in the company which started way before the Indian independence, Bata has grown into a trusted brand among Indian customers. Even during the Corona crisis, the company continued its growth journey and the results for the last quarter were encouraging for the investors. In the following section, we will understand the tremendous growth in value of Bata’s shares over the past few decades through a calculation based on a hypothetical investment made in the company in 1978. 

Calculation related to Bata’s Share growth

  • Suppose someone bought 100 shares of Bata in January 1978 which might have been worth a few thousand only as the share prices were quite low.
  • Now, Bata has been known for giving bonus shares to its investors as a gift for their loyalty and trust in the company’s business. Bonus shares are fully paid-up shares that are introduced in a ratio by companies for shares owned by the investors. For example, if a company introduces bonus shares in the ratio of 3:5 then it will mean that for every 3 shares owned by the investor the company will give 5 shares as a bonus

Now. According to the bonus history of Bata India Ltd., it has introduced a bonus three times in the following ratio as shown in the table.

The bonus history of Bata is given in the following table:

Bonus History   
Announcement DateBonus RatioRecord DateEx-Bonus Date
05/10/19871 : 121/08/1987 
11/09/19842 : 5  
11/09/1979   1 : 4  

Sources: https://economictimes.indiatimes.com/bata-india-ltd/infocompanybonus/companyid-13974.cms

  • The issue of bonus shares in were 1:4 which meant 4 bonus shares for every 1 share. So, the net shares owned after this were 100 shares + 400 bonus shares = 500 shares.
  • Similarly, bonus shares issued in 1984 were 2:5, that is 5 shares for every two shares. This meant that the total no. of shares was 500 shares + 1250 bonus shares = 1750 shares.
  • Another bonus was introduced in 1987 in the ratio 1:1. This made the total no of shares equal to 1750 shares + 1750 bonus shares = 3500 shares.
  • Now, due to the steep increase in the price of Bata India Ltd.’s shares, it announced a stock split from 2:1 in 2015 to make their shares affordable for small retail investors.

The stock split from 2 to 1 meant if the face value of a share was Rs. 10 then it has now become 2 shares of value 5 rs. each.

Source: https://thebatacompany.com/the-company/

  • The stock split would have raised the total no. of shares to double that is 7000 shares.
Announcement DateOld FVNew FVRecord DateEx-Split Date
27/05/201510508/10/201507/10/2015

Source:  https://economictimes.indiatimes.com/bata-india-ltd/infocompanysplits/companyid-13974.cms

  • However, the price per share of Bata’s share still managed to plummet over the years and stand at the rate of Rs. 1,406.20 in March 2021.
  • Considering this rate, the current value of the shareholder’s investment made in 1978 would be

7000 shares x Rs. 1406.20 = Rs. 98, 43, 400.

Source: https://economictimes.indiatimes.com/bata-india-ltd/infocompanysplits/companyid-13974.cms

 https://economictimes.indiatimes.com/bata-india-ltd/infocompanybonus/companyid-13974.cms

https://in.investing.com/equities/bata-india-historical-data?interval_sec=monthly

So, we can observe how the prices of Bata shares bought in 1978 in a few thousand rupees became almost Rs. 98.5 Lakhs by 2021. This huge share growth is enough evidence that finding old shares of Bata from an investment made by any elderly in-home or parents could be like finding lost treasure. One can simply contact any financial consultancy firm after finding such old share certificates and raise the claim with their help to the company or the IEPF authority.

The above-calculated value of shares is not the final value. It doesn’t contain the dividends shared by the company on these shares since the day they were bought. If we add the price received as dividends then the overall growth will cross limits. This is why we are saying that even after all the expenses related to shareholding and claim the final amount received on such shares would be huge enough to save the investor from any financial crisis.

In the following section, we have given a list containing dividends released by Bata India Ltd since the year 1999.  Any business analyst or investor can study this table to get the basic idea of how the dividends have grown over the years on the Bata shareholdings.  

DIVIDEND Released by Bata India Ltd.

The following table gives data on the year-by-year dividends released by Bata India Ltd. since 1999.

Dividends Declared
Announcement DateEffective DateDividend TypeDividend (%) Remarks 
26/05/2020 29/07/2020Final80%Rs. 4.0000 per share (80%) Dividend (Revised) 
24/05/2019 22/07/2019Final125%Rs. 6.2500 per share (125%) Dividend 
22/05/2018 09/07/2018Final80%Rs. 4.0000 per share (80%) Dividend 
15/05/2017 06/07/2017Final70%Rs. 3.5000 per share (70%) Dividend 
31/05/2016 19/07/2016Final70%Rs.3.5000 per share (70%) Dividend 
27/05/2015 20/07/2015Final65%Rs.6.5000 per share (65%) Dividend 
12/02/2014 05/05/2014Final65%Rs.6.5000 per share (65%) Dividend 
26/02/2013 17/05/2013Final60%Rs.6.0000 per share (60%) Dividend 
29/02/2012 14/05/2012Final60%50% Dividend & 10% Special Dividend 
23/02/2011 10/06/2011Final40%  
24/02/2010 06/05/2010Final30%  
27/02/2009 07/05/2009Final25%  
31/03/2008 29/05/2008Final20%(Total Dividend 20% i.e. 15% + additional 5% dividend to celebrate 75 years). 
30/03/2002 30/05/2002Final8%AGM 
05/02/2001  Final15%  
30/03/2000  Final15%AGM and Dividend 
26/03/1999  Final8%Dividend 

Source: https://economictimes.indiatimes.com/bata-india-ltd/infocompanydividends/companyid-13974.cms

What is Investor Education and Protection Fund [IEPF]?

There could be a plethora of reasons that could lead an investor to ditch his investments. Due to this, in almost every firm, dormant shares are lying within the unclaimed shares account without anyone to lay a claim on them.

Earlier, the businesses were asked by the government to transfer such dormant capital to their general public welfare account where this money might be utilized in the government’s infrastructure projects and public welfare schemes. However, there was no law to guide the businesses and therefore they were unsure about the quality procedure to resolve the difficulty of unclaimed dividends. Also, there was no procedure available for people coming after years to lay a claim on their money. Either the government could have let the businesses keep these huge amounts to themselves expecting the rightful shareholder to return for their dividend or it could simply reject the claim request of investors.

Both the choices seemed unviable as a company could use these dormant funds for its benefits. Also, neither the company nor the government has any right to reject a rightful owner from getting his value of the investment. So, to deal with this issue, the govt. came up with IEPF authority which was liable for handling the dormant shares and dividends of investors. The government also released rules for IEPF and therefore the procedure to get dividends from IEPF for the investors. We will understand in short about the provisions of IEPF for the claim of dividends before moving on to the procedure of claiming the shares.

It might be a touch hard to believe but it’s quite common for senior citizens to ditch their old shareholdings in several companies. There are many reasons for the said behaviour, such as:

  • Investment of a micro capital which individuals tend to forget after a particular time thinking that it might not grow significantly.
  • Health problems with senior citizens lead them to forget their investments made during adult days.
  • People buy shares of a firm without naming any nominee. If they die, the shares might remain unclaimed because the possible heirs of the deceased don’t have any knowledge of the existence of such shares.
  • Sometimes, there are many possible heirs of the dead person and therefore the shares in question grind to a halt in the legal battle between the parties claiming them and thus remain dormant for years till a resolution is reached.

Procedures Governing IEPF

The released provisions of the IEPF by the government stated that an investor must claim his dividend from the corporation/company within one month of its release. If the investor doesn’t claim the cash within one month then the entity is obliged to transfer this unclaimed dividend to its special unclaimed dividend account created as per IEPF rules. The unclaimed dividends will dwell in this account for seven years during which an investor can simply contact the company’s nodal officer or agency to lay claim on the dividend from this account. After seven years, the dividends must be transferred to the IEPF account and it’ll dwell in that account until a claimant makes a legitimate claim request to IEPF with relevant documents. So, all the businesses must transfer all the dormant shares from their unclaimed dividend account to the IEPF if they’re older than seven years.

The investors whose shares older than seven years are transferred to the IEPF can apply to IEPF for recovery of shares and dividends. The procedure for an equivalent is illustrated in short within the following section.

Why does one Need Legal Help?

The procedure to file a claim from IEPF is a 4 step process. 

  • A claimant should reach the company’s nodal officer to get details of his shares. If the shares have been transferred to IEPF then he must make an online application on its website. 
  • After making the online application the claimant should simply download the filled application and send it to the nodal officer of the company with all the relevant documents for verification.
  • The nodal officer will verify all the documents and forms. Within fifteen-day, the nodal officer has to send all the documents with the application form and a verification report of the same to the IEPF Authority.
  • In the last step, the authority will verify every document, application form, and verification report. If they found some discrepancy or any missing document then they will send a notice to the claimant via nodal officer to rectify the mistake within two weeks or submit the additional document. If everything is good then they may pass the claim. If there are major mistakes or faults in documents then the claim will be rejected. 

As mentioned, the method to file the claim for lost shares or unclaimed shares from IEPF is complex and an application has got to undergo intense scrutiny to be eligible for approval. Hence any small errors or non-filing of any relevant document to the IEPF authority must be avoided. To do so, a claimant can simply hire a financial consulting firm who will complete the entire process on their behalf with the responsibility of not committing any error. This may also save the investor from all the effort of liaising with the nodal officer and authority till the claim is approved.

One can simply hire a reputed financial and legal consultancy firm to file all the relevant ownership documents for the claim of shares. They will also help in handling any relevant dispute associated with ownership just in case the first owner of the shares is deceased. Therefore, the perfect procedure for claiming the shares from IEPF is by collaborating with the specialist of the procedure.

By | 2021-04-06T11:12:14+05:30 April 6th, 2021|Recovery of Bad Debt|0 Comments

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