KM Sugar Mills Limited has achieved a significant milestone in its corporate restructuring initiative, receiving approval from the National Company Law Tribunal (NCLT) Allahabad Bench for the first motion application of its proposed scheme of arrangement. The company received the NCLT order dated March 24, 2026 on March 27, 2026, marking a crucial step forward in the demerger of its distillery division.

NCLT Order Details

The NCLT Allahabad Bench, comprising Member (Judicial) Sh. Praveen Gupta and Member (Technical) Sh. Ashish Verma, has directed the company to proceed with specific stakeholder meetings while providing certain dispensations:

The tribunal has appointed Sri Harnam Singh Thakur as the common Chairperson for the meetings, with Mr. Deependra Mohan as the alternate Chairperson and Mr. Ankit Kumar Singh as the scrutinizer. The meetings will be conducted through video conferencing with remote e-voting facilities.

Demerger Structure and Share Entitlement

The scheme involves the demerger of the distillery division from KM Sugar Mills Limited (demerged company) to KM Spirits and Allied Industries Limited (resulting company), which is a wholly-owned subsidiary incorporated specifically for this purpose. The share entitlement ratio has been established as follows:

Stakeholder Composition

The NCLT order provides detailed information about the stakeholder structure for both companies:

KM Sugar Mills Limited (Demerged Company):

• Equity Shareholders: 54,359 (listed company)
• Secured Creditors: 5 (96.23% consent received)
• Unsecured Creditors: 414

KM Spirits and Allied Industries Limited (Resulting Company):

• Equity Shareholders: 7 (100% consent received)
• Secured Creditors: Nil
• Unsecured Creditors: 2 (100% consent received)

Business Rationale and Benefits

The demerger aims to separate two distinct business divisions with different operational characteristics, regulatory environments, and growth prospects. The distillery division, which manufactures and distributes rectified spirit, ethanol, country liquor, and extra neutral alcohol, has matured into a robust independent business with substantial growth potential.

Key benefits outlined in the scheme include:

• Enhanced operational efficiency through focused management
• Strategic flexibility for sector-specific opportunities
• Unlocking shareholder value through independent market valuation
• Attraction of different investor sets for each business vertical
• Greater transparency in performance metrics

Regulatory Approvals and Compliance

The company has secured necessary approvals from stock exchanges, with both NSE and BSE issuing observation letters on January 12, 2026 and January 13, 2026 respectively, confirming no objection to the proposed scheme. The board of directors of both companies approved the scheme on August 7, 2025.

Next Steps

Following the stakeholder meetings scheduled for May 30, 2026, the company will need to file the second motion petition within seven days of the chairperson's report submission. The scheme requires final sanction from the NCLT before implementation, with the appointed date set as April 1, 2026.

K.M. Sugar Mills has announced the demise of its Chairman and Promoter Shri Laxmikant Dwarkadas Jhunjhunwala, who passed away on March 14, 2026. The company informed both BSE and NSE about this significant development through a regulatory filing dated March 15, 2026.

Leadership Loss and Company Impact

Shri Laxmikant Dwarkadas Jhunjhunwala served as Chairman, Promoter and Director of K.M. Sugar Mills Ltd. The company described him as a great leader and visionary whose guidance and foresight immensely benefitted the organization. His sudden and unexpected passing has been termed an irreparable loss to the company.

The company and all its employees have conveyed their deepest sympathy, sorrow, and heartfelt condolences to his family during this difficult time.

Regulatory Compliance and Shareholding Details

The announcement was made pursuant to Regulation 30 and Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Following his demise, Shri Jhunjhunwala shall cease to be part of the Promoter/Promoter Group of the company in accordance with Regulation 31A(6)(c) of the SEBI LODR Regulations, 2015.

Corporate Governance Transition

The regulatory filing was signed by Ritika Tandon, Company Secretary & Compliance Officer, who ensured timely disclosure to both stock exchanges. The company has requested the exchanges to take this information on their records as required under the listing regulations.

K.M. Sugar Mills Ltd., with its factory and works located at PO Motinagar-224201, Dist. Ayodhya, Uttar Pradesh, will need to navigate this leadership transition while maintaining its operational continuity and corporate governance standards.