Recovery of Nestle India Shares from IEPF
Shares of Nestle India were floating at a price of more than ₹ 18, 000 per share in the market as of 27th November 2020. How would you feel if you suddenly come to know that you own some shares of this company? Amazing, right? Even a small number of 6 shares will fetch you an amount of more than ₹ 1 lakh.
Excited to know, how? Here, I am going to discuss how you could earn a fortune if you just came to know that there exist shares of Nestle India Ltd. in your name. If there are long-forgotten shares of Nestle India in the name of IEPF Account, which were in your name, then this blog is for you.
History of the Company
Nestle India Ltd. is an FMCG (“Fast Moving Consumer Goods”) company that was incorporated in 1959. It is a Large Cap company with a market capitalization of ₹1,72,477.59 Crore (One Lakh Seventy-Two Thousand Four Hundred Seventy-Seven Crores Fifty-Nine Lakh Rupees). As of 31st December 2018, the company earned revenue of ₹ 11, 294.65 Crores. The key products/ revenue segments that contributed to this revenue are as follows:
| S. No. | Key Product/ Segment | Revenue Amount (in ₹) | %age of Total Sales |
|---|---|---|---|
| 01 | Milk Products | 5, 187.63 Crores | 45.93 % |
| 02 | Prepared Dishes & Cooking Aids | 3, 105.25 Crores | 27.49 % |
| 03 | Beverages (Powdered) | 1, 522.61 Crores | 13.48 % |
| 04 | Confectionery | 1, 400.74 Crores | 12.40 % |
| 05 | Export Incentives | 55.82 Crores | 0.49 % |
| 06 | Other Operating Revenue | 20.22 Crores | 0.17 % |
| Total | 11, 294.65 Crores | 100 % |
Even during the setback of the COVID-19 pandemic, it continued to generate profits due to which its share price kept on increasing. During the pandemic itself, the stock price has increased by ₹ 3, 500. In the last quarter, i.e., the quarter ended 30th September 2020, the company has reported sales of ₹ 3, 525.41 Crores in the stated quarter alone. This is a 15.91% increase from the previous quarter, i.e., the quarter ended 30th June 2020. The company has earned a net profit of ₹ 587.09 Crores after the tax deduction in the last quarter only. As per the quarterly report, the company has a total of 9, 64, 15, 716 (Nine Crore Sixty-Four Lakhs Fifteen Thousand Seven Hundred Sixteen) shares outstanding at the end of the last quarter.
Nestle India is known for giving its shareholders handsome dividends. To date, the company has given a total of 60 dividends to its shareholders amounting to ₹ 1, 292.5 per share. And in this year alone, the company has declared a dividend of ₹ 196 per share.
P.S.: This information regarding the dividend is based on the data provided from 2001 onwards.)
If you have 600 shares of Nestle India registered under your name, then the value of those shares as of the day would be in crores. The dividend amount alone would be in lakhs.
Calculation
- Suppose you have 600 shares of Nestle India Ltd. registered under your name.
- Now, the price of 1 share of Nestle India Ltd., as of 27th November 2020, is ₹ 18, 040. Thus, the value of your shares as of date is,
₹ 18, 040 x 600 shares = ₹ 1, 08, 24, 000 (One Crore Eight Lakhs Twenty-Four Thousand)
- The above amount is only the price of the shares. We have not calculated the dividends that you have received so far.
- The amount of Dividend received so far (from 2001) is,
₹ 1, 292.5 x 600 shares = ₹ 7, 75, 500
- The amount of Dividend received in this financial year is,
₹ 196 x 600 shares = ₹ 1, 17, 600
As you can see, the shareholders of Nestle India have received a huge amount of dividends from the company. From 2001 onwards, the shareholders, so far, would have received ₹ 7, 75, 500 while in this year itself, they would have received ₹1,17,600. [According to the Hypothetical above]
Source: https://trendlyne.com/equity/Dividend/NESTLEIND/930/nestle-india-ltd-dividend/
Now, you can calculate your total dividend accordingly.
As you could see, if you had 600 shares of Nestle India registered under your name, then you would have become a Crorepati today. Now, just imagine that you invested in this company a long time ago and then you forgot about the existence of its shares. Or you have inherited some shares from your deceased family member, but you did not know about them. Due to this reason you did not claim any dividend on these shares for 7 years straight. In such a scenario, these shares are not in your possession anymore because they had been transferred to the IEPF account of the Government. This does not mean that you are no longer the rightful owner of those shares. The only difference is that the Government, on your behalf, is keeping your shares and dividend amount safe with them. You can always claim your lost shares and unpaid dividend from the Government under IEPF. The Government introduced this scheme in 2016 to resolve the problem of such ‘long lost and forgotten shares’.
About Investor Education and Protection Fund
The government started this scheme to educate the investors and protect them from losing their rights over the funds and the shares. When the investors used to forget about their shares, they used to get transferred to the Government Funds along with the unclaimed dividend amount. They could then be utilized by the Government for public welfare. Since the problem of people forgetting their shareholdings in a company was increasing, the Government realized that it was causing huge losses for the investors. Therefore, the Government decided to set up the IEPF. It is a one-stop solution that the government provides to the members of a company. Here, the members can approach the government and claim their dividends and ask them to refund their long-forgotten shares. The IEPF was initiated while keeping in mind the interests of the shareholders. IEPF protected the investors’ funds while spreading awareness regarding the same.
The Government takes care of the unclaimed dividend and lost shares transferred to this account on behalf of the rightful shareholders. Thus, even after 7 years, investors can claim their dividends and shares from the fund manager by applying to the managing authority. People can claim their dividends and shares of different companies through one platform instead of going to each company individually, that is why IEPF is known as a one-stop solution.
There are various reasons why an investor tends to forget about its investment in a company:
- No Nominee: Usually investors do not appoint a nominee/ heir to take care of the shares after their death. Therefore, the shares remain deserted because the heirs are clueless about their ownership of such shares.
- Small Investments: Generally, the investment is of small amounts due to which an investor forgets about the shares.
- Property Dispute: Shares get attached to the court because proceedings are pending in the courts regarding the property dispute. Thus, the shares remain ownerless till the court’s verdict.
These are amongst many other reasons why an investor forgets about his/ her investment in a company. Due to these reasons, the dividends on the shares remain unclaimed for years and the companies end up with abundant shares lying with them with no sign of ownership.
Provisions Governing IEPF
The functioning of IEPF is governed by the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Once a company declares a dividend on the shares, the shareholders get 30 days to claim the said dividend. After 30 days, if the dividends remain unclaimed by the shareholders, then the company, according to the above-stated laws, is obliged to transfer such dividends to a special account. This special account is opened in the name of the company, known as ‘Unpaid Dividend Account’.
After that, the company gets 90 days to publish a list of all the shareholders along with their unclaimed dividends on its website. In addition to this, the company can use any other mode of communication to tell its members about their unclaimed dividends kept with the company. If a shareholder wants to retrieve his unclaimed dividend from the ‘Unpaid Dividend Account’, then he has to file an application to the transfer agent of the company. Despite all these, if a shareholder, for any reason stated above, fails to claim the amount from the company for 7 years, then the company shall transfer such unclaimed dividend to the IEPF Account. If the dividends are not claimed for 7 years, then the shares on which such dividend was declared were considered as forgotten shares. Therefore, they also get transferred in the name of the IEPF. Thus, if the dividends remain unclaimed for 7 years, then the dividend and shares, both get transferred to the IEPF Account.
Dividends and Shares of Nestle India Ltd. in IEPF
The Annual Reports of a company state the current status of the dividends and shares of the company which are transferred to the IEPF account. According to the Annual Report of Nestle India Ltd. of 2019-2020, all the unclaimed dividends up to the financial year 1995-1996 which remained unpaid and unclaimed with the company were transferred to the Central Government’s general revenue account. As mentioned above, before the introduction of the IEPF, the companies were supposed to transfer the funds directly to the Central Government.
All the unclaimed dividends, from the financial year 1996-1997 to 2012-2013, remaining deserted with the company, along with the shares, were transferred to the IEPF Account in the name of the Central Government. The unclaimed dividends and shares were transferred to the IEPF pursuant to Section 124, Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Unclaimed dividends declared by the company for the financial year 2012-2013 were recently transferred to the IEPF according to the Annual Report 2019-2020. The deadline to claim the dividends for the financial year of 2013-2014 will be given in the annual financial report of 2020-2021. In case a shareholder wants to claim his/ her dividends, then he/ she can approach the Company Registrar/ Transfer Agent of the Company with the required documents. The shareholders can reach out to the Company Registrar/ Transfer Agent of the Company at M/s Alankit Assignments Limited, Alankit House, 4E/2, Jhandewalan Extension, New Delhi, 110-055.
An investor can check the status of their unclaimed dividend, declared by Nestle, from https://www.alankit.com/searchmodule/search
For more information, visit https://www.nestle.in/sites/g/files/pydnoa451/files/2020-05/Nestle-India-Annual-Report-2019.pdf
Dividend transferred to the IEPF
According to the Annual Report 2019-2020 of the company, Nestle India has transferred the following unclaimed dividend to the IEPF during the Financial Year of 2019:
| Particulars | Amount of Dividend (in ₹) | Date of Transfer |
|---|---|---|
| Final Dividend 2011 | 28, 83, 288 | 23rd May 2019 |
| 1st Interim Dividend 2012 | 33, 43, 770 | 13th September 2019 |
| 2nd Interim Dividend 2012 | 35, 97, 120 | 17th January 2020 |
| Total | 98, 24, 178 | – |
Source: https://www.nestle.in/sites/g/files/pydnoa451/files/2020-05/Nestle-India-Annual-Report-2019.pdf
In the previous financial year, Nestle India Ltd. has transferred an amount of Ninety-Eight Lakhs Twenty-Four Thousand One Hundred Seventy-Eight Rupees of unpaid and unclaimed dividend to the IEPF account of the Central Government. By looking at the amount of dividend, you can very well imagine the number of shares which lie unclaimed in the IEPF account. In the previous year itself, the company has transferred 4, 806 shares in the IEPF which amount to ₹ 8, 65, 08, 000. In total, the IEPF Account holds 0.1% of the total shareholding of Nestle India, i.e., 95, 575 shares. This amounts to ₹ 1, 72, 03, 50, 000. The shareholders, who forgot about their shares, are in loss of more than One Hundred Seventy-Two Crore Rupees.
P.S.: This amount is calculated by multiplying the shares transferred by the current price of the share.
95, 575 shares x ₹ 18, 000 = ₹ 1, 72, 03, 50, 000
As we can see, the amount of the unclaimed shares transferred to the IEPF account is more than a hundred crore. The company has a huge chunk of unclaimed shares in the IEPF. Thus, the shareholders are strongly 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.
Unclaimed Shares & Lost Dividend Transferred to IEPF
Now, you might be wondering as to what happens to the shares and the dividend transferred to the IEPF. Do you still retain the right over the unclaimed dividend and the lost shares?
The short answer to that question is “Yes”. Yes, you do retain rights over the dividend and the lost shares, irrespective of the fact that the same has been transferred to the IEPF Account. As mentioned above, earlier it used to happen that the shareholder loses the rights over the dividend amount and the shares once they were transferred to the Government funds. But with the introduction of IEPF, a shareholder no longer loses his/ her right over the dividend amount as well as the shares. He/ She can apply to the fund manager to transfer the dividend amount accumulated and the shares back to the name of the original shareholder or the heirs of the same, as the case may be. Despite the fact, Nestle India still encourages its members to claim the dividends on time from the company itself, to avoid its transfer to the IEPF Account. The company sends individual letters, through posts and other modes of communication, to make their shareholders aware of their holdings in the company. Nestle India does this to prevent its members from going through the rigorous and tiresome procedure of recovering the money and shares from the IEPF Authority. The fund manager follows this rigorous procedure to ensure that the shares get transferred to the actual owner only. When shares remain unclaimed for a long period, i.e., 7 years or more, they become prone to someone fraudulently transferring them to his name. Thus, to avoid such fraudulent transfers, the fund manager makes thorough scrutinization of all the applications before initiating the transfer of the amount and the shares. Due to this thorough scrutinization, the procedure becomes time-consuming and it becomes hard for the members to get their shares back. That is why Nestle India recommends its shareholders to claim the dividends from the company from time to time as it takes less time and is an easy process. To claim the dividends, the shareholders have to apply to the Registrar or the Transfer Agent of the Company at the above-mentioned address. However, if your shares are already transferred to the IEPF, then you can approach the Nodal Officer, Balasubramaniam Murli, or the Deputy Nodal Officer, Pramod Kumar Rai, of the Company, appointed in this regard. To contact the Nodal/ Deputy Nodal Officer of Nestle India, write an email to [email protected].
The Necessity of Legal Help?
As stated above, the procedure to claim the refund of unclaimed dividends and lost shares from the IEPF Authority is a difficult and technical process. A certain degree of expertise is required to file the application to the fund manager. Hiring a legal professional can help you to save yourself from this tedious task. Your legal expert will take care of all the work and formalities required to file the refund application to the IEPF. If there are mistakes in an application, the IEPF authority straight away rejects it, and the claimant has to repeat the whole procedure. Your lawyer will ensure that there are no mistakes in your application so that the authority approves it without any objections. From contacting the nodal officer to collect information to filing the application with the authority, the lawyer will take care of everything.
Hiring a lawyer will be extremely helpful if your shares are stuck in a family dispute. As mentioned, sometimes, the shareholder dies without any nominee, and he also forgets to put shares in his will. In such a case, all the family members of the deceased come to claim their right to the deceased’s property, i.e., Nestle Shares in this case. Not hiring a legal expert can cost you a fortune that you are entitled to. Why will people leave shares worth crores? These disputes can take a long period of time to get settled. And if you are without a lawyer, then the other party will walk all over you and you will be left with nothing but pennies. A legal professional or a legal firm will represent you in all such disputes related to the ownership of the shares. A lawyer with the command of the law can protect you from all the loopholes which might go against you and thus, can provide you with the best deal possible.
Conclusion…
Nestle India is one of the largest and diverse FMCG companies with constant growth. Even this year, when everyone was struggling to cope up with the pandemic, the stock prices of this company managed to increase by ₹ 3, 500 per share. Due to this ever-increasing pace, the price of 1 share of Nestle India was floating at ₹ 18,000 per share. Therefore, it is the best time to sell some of your shares and secure a good profit. It might even help you to cope up with the financial difficulties, if any, that arose due to the pandemic. So, if you just came to know about the existence of any such shares in your name, which were left to you by your deceased family member, then it is the best time to claim them from the IEPF fund manager. In addition to your shares, you will also receive the dividend accumulated over time. I would advise you to check out the links mentioned above that will take you to the required section of the company’s website. Gather information regarding your dividends accumulated so far, along with your shareholding in the company, and file an application to claim your dividend from Nestle India Ltd. You will have to apply to the Nodal Officer of the Company, by contacting them at [email protected]. If your dividend amount and shares are already transferred to the IEPF, even then you can claim the same by filing an application to the fund manager of the IEPF. For this, hire a legal expert as soon as possible and apply to the IEPF Authority for the refund of the unclaimed dividend and the recovery of the transferred shares. A legal expert will also help you to fight for the shares stuck in a family dispute.