Alchemist Realty Ltd Company profile:

--> --> --> Alchemist Realty Ltd

BSE: 532114 | NSE: NA | ISIN: INE646D01024
Market Cap: [Rs.Cr.] 37 | Face Value: [Rs.] 2
Industry: Construction 

 

Company Profile

Alchemist Realty Limited is an India-based company. The Company is engaged in construction and real estate business activities. The Company focuses on developing information technology (IT) commercial complex, supermarkets, entertainment centers, multi storied residential complex and shopping complex. Its real estate development projects include commercial and office complexes, convention and entertainment centers, restaurants & hotels, super markets, shopping complexes, and flats. The company's clients are Indian Oil Corporation, Hindustan Vegetable Oils Corporation, Indo-French Biotech Enterprises, Sandoz (India), Franco Indian Pharmaceuticals, Laboratories Griffon, Fargo Sales, Gujarat Co. Op. Milk Marketing Federation (Amul Dairy, Anand) and Rollicks Holdings. Alchemist Realty started its commercial production in March 13, 1984 which was its first phase of operations, with an installed capacity of 900 TPA. The project is located at 290/1 GIDC, Vapi, Dist. Bulsar Gujarat. The plant is currently operating at 70% of installed capacity. Alchemist Realty, formerly as Pan Packaging, changed its name on Novermber 3, 2006 to Alchemist Realty. It also altered its Memorandum of Association to include real-estate in its main objects clause. The company has also reported a number of bulk share transactions since then. The company s registered office is at Mumbai. The company focuses on developing Information Technology (IT) commercial complex, supermarkets, entertainment centers, multi-storied-residential-complex and shopping complex. In August 2011, the Company acquired Alchemist Hill Resorts Pvt. Ltd. Company has issue more than 5500cr share to public. more detail visit here For any Query regarding redeemable Preference share Contact Email: tejamymaurya@gmail.com

 

Meaning, Definition and Classification of Preference Shares

Definition of Preference share:

 A company needs finance to meet its various types of requirements.While some fund are required for a fairly long time for the purpose of acquiring fixed assets,some other are required for day to day working.Raising capital by issue of shares is a most important method of raising long-term funds. Those funds can be invested in long-term or permanent assets like land and building, plant and machinery, furniture etc. A share is unit of measure of a shareholder's interest in the total capital of the company. Share capital of a company is divided into a large number of equal parts and each part is known is a share. According to Companies Act, a company can issue two types of shares -preference and equity.

Preference shares. Sec. 85(1) of the Companies Act defines preference shares as those shares which carry preferential rights as the payment of dividend at a fixed rate and as to repayment of capital in case of winding up of the company. Thus, both the preferential rights viz. (a) preference in payment of dividend and (b) preference in repayment of capital in case of winding up of the company, must attach to preference shares. The rate of dividend on these shares is fixed and the dividend on these shares must be paid before any dividend is paid to ordinary shares. Directors, however, may decide not to pay any dividend to any class of shareholders even if there are sufficient profits. But, if any how, they decide to pay the dividend, preference shareholders will get the priority to pay the ordinary shareholders.

Preference shares may be classified according to the rights attached to them as follows:

Cumulative and Non-cumulative Preference shares

The holders of cumulative preference share are entitled to arrears of dividend on their share to be paid out of profits of subsequent years.Cumulative preference shares enjoy the right to receive the dividend in arrears for the years in which company earned no profits or insufficient profits, in the year in which company earns profits. In other words, dividend on these shares will go on accumulating until it is paid in full with arrears, before any dividend is paid on equity shareholders. In case of non-cumulative preference shares dividend does not accumulate and therefore, no arrears of dividend will be paid in the year of profits. If company does not have any profits in a year, no dividend will be paid to non-cumulative preference shareholders.

Redeemable and Irredeemable Preference Shares

Redeemable preference shares are those which will be repaid on or after a certain date in accordance with the terms of issue.Redeemable preference shares can be redeemed on or after a period fixed for redemption under the terms of issue or after giving a proper notice of redemption to preference shareholders. The companies Act, however, impose certain restrictions for the redemption of preference shares. Irredeemable preference shares are those shares which cannot be redeemed during the lifetime of the company. (We are going to Sale here only Redeemable Preference Shares).

Convertible and Non-convertible preference shares

Convertible preference shares are those preference shares which are given a right to be converted into equity share within a fixed period of time.Preference shareholders are given a right to covert their holding into ordinary shares, within a specified period of time, such shares as known as convertible preference shares. The holders of non-convertible preference shares have no such right of conversion.

Participating and Non-participating Preference Shares

The holders of participating preference shares have a right to participate in the surplus profits of the company remained after paying dividend to the ordinary shareholders and preference shareholders at a fixed rate. The preference shares which do not have such right to participate in surplus profits, are known as non-participating preference shares.

The advantages of Preference shares are as follows:

(A) Advantages from Company point of view:

The company has the following advantages by issue of preference shares.

I. Fixed Return: The dividend payable on preference shares is fixed that is usually lower than that payable on equity shares. Thus they help the company in maximizing the profits available for dividend to equity shareholders.

II. No Voting Right: Preference shareholders have no voting right on matters not directly affecting their right hence promoters or management can retain control over the affairs of the company.

III. Flexibility in Capital Structure: The Company can maintain flexibility in its capital structure by issuing redeemable preference shares as they can be redeemed under terms of issue.

IV. No Burden on Finance: Issue of preference shares does not prove a burden on the finance of the company because dividends are paid only if profits are available otherwise no dividend.

V.No Charge on Assets: No-payment of dividend on preference shares does not create a charge on the assets of the company as is in the case of debentures.

VI. Wide Capital Market: The issue of preference shares widens the scope of capital market as they provide the safety to the investors as well as a fixed rate of return. If company does not issue preference shares, it will not be able to attract the capital from such moderate type of investors.

(B) Advantages from Investors point of view:

Investors in preference shares have the following advantages:

I. Regular Fixed Income: Investors in cumulative preference shares get a fixed rate of dividend on preference share regularly even if there is no profit. Arrears of dividend, if any, is paid in the year's) of profits.

II. Preferential Rights: Preference shares carry preferential right as regard to payment of dividend and preferential as regards repayment of capital in case of winding up of company. Thus they enjoy the minimum risk.

III. Voting Right for Safety of Interest: Preference shareholders are given voting rights in matters directly affecting their interest. It means, their interest is safeguarded.

IV. Lesser Capital Losses: As the preference shareholders enjoy the preferential right of repayment of their capital in case of winding up of company, it saves them from capital losses.

V. Fair Security: Preference share are fair securities for the shareholders during depression periods when the profits of the company are down.

The Disadvantages of Preference Shares are as follows:

The important disadvantages of the issue of preference shares are as below:

(A) Demerits for companies:

The following disadvantages to the issuing company are associated with the issue of preference shares.

I. Higher Rate of Dividend: Company is to pay higher dividend on these shares than the prevailing rate of interest on debentures of bonds. Thus, it usually increases the cost of capital for the company.

II. Financial Burden: Most of the preference shares are issued cumulative which means that all the arrears of preference dividend must be paid before anything can be paid to equity shareholders. The company is under an obligation to pay dividend on such shares. It thus, reduces the profits for equity shareholders.

III. Dilution of Claim over Assets: The issue of preference shares involves dilution of equity shareholders claim over the assets of the company because preference shareholders have the preferential right on the assets of the company in case of winding up.

IV. Adverse effect on credit-worthiness: The credit worthiness of the company is seriously affected by the issue of preference shares. The creditors may anticipate that the continuance of dividend on preference shares and suspension of dividend on equity capital may deprived them of the chance of getting back their principal in  full in the event of dissolution of the company, because preference capital has the preference right over the assets of the company.

V. Tax disadvantage: The taxable income is not reduced by the amount of preference dividend while in case of debentures or bonds; the interest paid to them is deductible in full.

(B) Demerits for Investors:

Main disadvantages of preference shares to investors are:

I. No Voting Right: The preference shareholders do not enjoy any voting right except in matters directed affecting their interest.

II. Fixed Income: The dividend on preference shares other than participating preference shares is fixed even if the company earns higher profits.

III. No claim over surplus: The preferential shareholders have no claim over the surplus. They can only ask for the return of their capital investment in the company.

Inquiry  Regarding preference share Contact. Email:

tejamymaurya@gmail.com

When the preference shares are issued with the stipulation that these shares are to be redeemed after a certain period of time, then such preference shares are known as redeemable preference shares.

According to section 100 of Indian Company Law, " If a company collects the money through redeemable preference shares, this money must be returned on its maturity whether company is liquidated or not. Section 80 describes the following provisions relating to redeemable preference shares:

1 # its repayment will be out of net profit of company or amount received through issuing of new shares. These shares will never be redeemed by the amount of new issue of debentures of company. It means, we can not use loan for repayment of preference share capital. Company also can not use the sale amount of any asset for redemption of redeemable preference shares.

2. # Capital reserves from forfeiture of shares and share premium account are not available for payment to redeemable preference shareholders.

3. # No such shares shall be redeemed unless they are fully paid. Only fully redeemable shares will be redeemed.

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Inquiry  Regarding investment in Redeemable preference share Contact Email: 

tejamymaurya@gmail.com