Depository chief sore with Nestle for its refusal to demat shares

Mumbai, July 3: Leading multinational, Nestle, is in the eye of yet another storm. This time around the rap has come from the National Secur...

Mumbai, July 3: Leading multinational, Nestle, is in the eye of yet another storm. This time around the rap has come from the National Securities Depository Ltd NSDL chief CB Bhave, who is peeved on the company8217;s stand of not providing its shareholders the demat option.

Nestle India Ltd is among the six companies which form part of either the Nifty NSE-50 or Sensex BSE-30 indices which have not signed up with the depository to provide the demat option to shareholders.

However, while the remaining five ie Andhra Valley, Bhel, Colgate-Palmolive, EIH and Tata Power, have informed the depository that they are working out the modalities for giving the demat option to shareholders, Nestle, has according to Bhave, said that it is not interested at present to offer this facility to shareholders.

quot;Even though Sebi is keen to ensure that all companies atleast those part of the leading indices are covered under the depository, it has not met with much success as some companies like Nestle, Andhra Valley andTata Power, have not shown much enthusiasm in offering this facility to shareholders for no concrete reason whatsoever. The latter two Tata group companies have informed us that they are still working out the procedures. There is a need to get these companies with large shareholder base into the depository system at the earliestquot;, said Bhave.

Incidentally, the Depositories Act has given the right to a shareholder to hold his shares in the demat form or the physical form and hence if shareholders of these companies express a desire to be given the option of holding shares in an electronic form there is little that a company can do but provide the facility to them.

Sebi, which has decided to go the whole hog in pushing for dematerialisation, is particularly keen on seeing stocks comprising the Nifty and the Sensex, recording high levels of dematerialisation. Once all these stocks are covered it could lead to the next step of reforms in the cash market like introducing rolling settlement in these securitiesas well as ushering in derivatives trading.

Bhave said that the entire scenario has changed now and the feedback from depository participants suggests that investors are now coming to them to open accounts rather than the other way round.

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More than 33,000 accounts have been opened, over Rs 35,000 crore worth of shares have been dematerialised and Bhave feels that the Sebi set targets of 50,000 accounts and Rs 50,000 crore worth of dematerialisation by August 15 would be met quite easily.

Nestle had only recently landed up on the wrong side of the Bombay Stock Exchange BSE for having failed to inform the exchange on time about crucial decisions taken by it, which had led to wide speculation in the scrip. This had even led to an investigation by Sebi and this investigation is still on.