Cadbury India has told the Bombay high court that the 30 per cent premium recommended by accountancy firm Ernst & Young over the previously-suggested valuation of Rs 1,340 per share was not acceptable as it would only further jack up its price.
Disclosing this to the court on July 6, the counsel for Cadbury said that if the company consented to the valuation of Rs 1,743 per share, it would be treated as 'deemed dividend' payable to shareholders.
Consequently, the company would have to pay dividend distribution tax, pushing up the share price to a little over Rs 2,000.
The court then asked the counsels for the company as well as the shareholders to appear again on July 14 to give their submissions on the matter.
The matter would be heard on Wednesday by Justice S F Vajifdar.
It may be recalled that Cadbury had appointed valuers Bansi Mehta & Co and SSPA & Co for fixing the share price, so it could buy back 2.5 per cent stake from minority shareholders.
But the shareholders, represented by the Investors Grievances Forum, had opposed the valuation of Rs 1,340 per share -- stating that they were not getting their due.
The court, on April 15, appointed Ernst & Young to independently value the shares of Cadbury India, and stated that its report would be binding on both the parties.
The court had also asked the counsels for Cadbury and the minority shareholders, Janak Dwarkadas and Pradeep Sancheti, to give their views on the recommendation by July 5. Ernst & Young had submitted their report, recommending a 30 per cent premium to the earlier valuation, on June 10.
According to the Investors' Grievances Forum, Cadbury has 8,088 shareholders in the country and abroad. Of them, 800 are minority non-promoter shareholders.
The forum claimed that only 79 of the 8,000 shareholders were present at the extraordinary general body meeting, where the company's majority promoter shareholders -- in a share capital reduction scheme -- decided to acquire 2.5 per cent minority shareholding at a price fixed by valuers.
