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TMI Blog2020 (3) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... em it fit not to sanction/ approve the proposed Scheme of Amalgamation - The scheme cannot be sanctioned. - COMPANY SCHEME PETITION NO. 2199 OF 2019 - - - Dated:- 2-3-2020 - HON BLE MEMBER (JUDICIAL) MR. RAJASEKHAR V.K. AND HON BLE MEMBER (TECHNICAL) MR. RAVIKUMAR DURAISAMY. For Petitioner Companies : Mr. Robert Pavrey, Practising Company Secretary ORDER Per : Ravikumar Duraisamy, Member (T). 1. Heard the learned counsel for the Petitioner Companies in the matter of Scheme of Amalgamation of RHI India Private Limited, RHI Clasil Private Limited and Orient Refractories Limited and their respective Second Petitioner Company/ Transferor Company 2 Third Petitioner Company/ Transferee Company shareholders (the Scheme ). No objector has come before this Hon ble Tribunal to oppose the Scheme nor has any party controverted any averments made in the Petition. 2. The sanction of the Tribunal is sought under section 230 to 232 of the Companies Act, 2013, to the proposed Scheme. 3. The learned counsel for Petitioner Companies states that the First Petitioner Company is primarily engaged in business of purchase, sale, import, export and marketing of refractories, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies through their learned counsel undertake to comply with all applicable statutory requirements, as required under the Companies Act, 2013 and the rules made thereunder. The said undertaking is accepted. 8. The Regional Director has filed his report dated 24 June 2019 stating therein that the Tribunal may consider the observations and pass such order or orders as deemed fit and proper in the facts and circumstances of the case post considering the observations made at Sr. No. IV (a) to (f) mentioned in his report. In paragraphs IV (a) to (f) it is stated that: (a) The Petitioners under provisions of section 230(5) of the Companies Act, 2013 have to serve notices to concerned authorities which are likely to be affected by Amalgamation. Further, the approval of the scheme by this Hon ble Tribunal may not deter such authorities to deal with any of the issues arising after giving effect to the scheme. The decision of such Authorities is binding on the Petitioner Company(s). (b) It is observed that the Petitioner companies have not submitted a Chairman s Report, admitted copy of the Petition, and Minutes of Order for admission of the Petition. In this regard, the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme. All issues arising out of the Scheme will be met and answered in accordance with law. 10. In so far as observations made in paragraph IV(b) of the Report of the Regional Director are concerned, the Petitioner Companies have through their learned counsel submitted a copy of the Chairman s Report together with an admitted copy of the petition and Order for admission of the petition. 11. In so far as observations made in paragraph IV(c) of the Report of the Regional Director are concerned, the Petitioner Companies through their learned counsel have filed an undertaking stating that the Scheme enclosed to the Company Application and the Scheme enclosed to the Company Petition are one and the same and there is no discrepancy or deviation. 12. In so far as observations made in paragraph IV(d) of the Report of the Regional Director are concerned, the Transferee Company undertakes that in addition to compliance of AS 14 (IND AS 103), the Transferee Company shall pass such accounting entries which are necessary in connection with the Scheme to comply with other applicable Accounting Standards such as AS-5 (IND AS-8). 13. In so far as observations made in paragraphs IV(e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the relevant portion from the Order is reproduced/ discussed below:- 24. The logic behind asking appointed date at the time scheme presented before Tribunal is that, appointed date has to be conceived as date from which demerged company undertaking is deemed as transferred to resulting company with all financial implications. And it will come into effect if scheme is approved by NCLT as well as approved by all regulatory and Sectoral Authorities, or else, that undertaking will continue as part of the demerged company as before. 25. To know the financials of this arrangement, the assets proposed to be transferred to the Resulting company shall be valued, so that the consideration payable for transfer of the assets can be fixed, then if any share swapping, then to decide swap ratio, like wise to decide transferability of assets or liabilities; stamp duty liability, tax (direct and indirect) liability and loss or gain of Tax benefits by valuation of. So this cut off date taken into consideration for valuation shall be the appointed date, because all the financial implications are dependent upon the cut off date and valuation thereof. 26. .Appointed date shall be the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed upon by the parties, or meeting any other requirement as greed upon between the parties, etc., which are relevant to the scheme. In the current Scheme of Amalgamation, a specific date, i.e. 01.01.2019 has been fixed as Appointed Date whereas as discussed above, valuation report, fairness opinion, Board Resolution of all the Petitioner Companies were dated 31.07.2018. Therefore, we are of the considered view that as clarified by the Ministry of Corporate Affairs, the Scheme is not tied to the occurrence of an event or fulfilment of any pre-conditions agreed upon by the parties, hence the appointed date should be the valuation date as discussed above. 23. In this case the Appointed Date is fixed as 01.01.2019 and the closing market price per share was ₹ 239.10 and the average market price per share was ₹ 234.50 on that date. 24. Valuation Report is dated 31.07.2018, the Fairness Opinion is also dated 31.07.2018 and the Board Resolution was passed by all the three Companies also on 31.07.2018 which implies that the valuation, fairness opinion, Board Resolution, all are dated 31.07.2018, i.e. all the important events have taken place on the same date, (appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ericas BV, Netherlands would get around 89,75,107 shares, Ms. R. Udaya Rekha would get around 37,37,400 shares, Mr. Venkata Suryanarayana Raju would get around 11,34,419 shares and Mr. AV Narsimha Raju would get around 16,33,964 equity shares of the Transferee Company. 29. Upon analysis of the Balance Sheet of RHI India Pvt. Ltd., the Transferor Company No.1, it is noticed that the profit for the year ended 31.03.2017 was approximately ₹ 10.25 crore and ₹ 40.90 crore for the year ended 31.03.2018 and Earning Per Share (EPS) is ₹ 299 and ₹ 1193 respectively for the same financial years. 30. In the case of RHI Clasil Pvt. Ltd., Transferor Company No. II profit for the year 31.03.2017 was ₹ 10.12 crore and ₹ 13.84 crore for the year ended 31.03.2018 and Earnings Per Share was ₹ 5.50 and ₹ 7.52 for the respective years. 31. As on the appointed date i.e. 01.01.2019 the share price of the Transferor Company on Bombay Stock Exchange, was ₹ 235.45, touched a high of ₹ 237.80 and a low of 231.25 and closed at ₹ 231.90. If we take average of High and Low as on 01.01.2019, the share price works out to ₹ 234.50 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who invested ₹ 1000 (100 equity shares, face value of ₹ 10) would be allotted shares worth ₹ 12,86,093 of the Transferee Company. 36. In the case of Transferor Company-II, the shareholder who made an investment of ₹ 10,000 (for 1000 equity shares of ₹ 10 each) would be allotted shares worth ₹ 1,65,782 of the Transferee Company. 37. Total paid-up share capital of Orient Refractories as on 31.07.2018 is 12,01,39,200 equity shares of Re.1 each, total paid-up share capital of RHI India as on 31.07.2018 is ₹ 34,28,440 (3,42,844 equity shares of ₹ 10 each) and in the case of RHI Clasil, the total paid-up capital is ₹ 18,40,00,000 (1,84,00,000 shares of ₹ 10 each). 38. Further, it is also observed that the Transferee Company would allot a maximum of 4,08,57,131 shares as per the Valuation Report which works out to 34% of the current paid-up share capital of the Transferee Company. Once the Scheme is approved and the Scheme coming into effect the total capital of the Transferee Company would increase to 16,09,96,331 shares and allotment of 4,08,57,131 shares as proposed in the Scheme would amount to 25.38% of the post a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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