Siyaram Silk Mills gets NCLT nod for bonus preference share issue scheme
NCLT Mumbai sanctioned Siyaram Silk Mills' scheme to issue 9% redeemable preference shares by way of bonus on July 21, 2026. Equity shareholders receive four Series I and three Series II shares per equity share. The move utilizes surplus reserves while maintaining operational liquidity, with shares to be listed on BSE and NSE.
*this image is generated using AI for illustrative purposes only.
The National Company Law Tribunal (NCLT) Mumbai bench sanctioned a Scheme of Arrangement between Siyaram Silk Mills and its shareholders on July 21, 2026, enabling the distribution of surplus reserves through a bonus issue of preference shares. This regulatory approval marks a significant step in optimizing the company’s capital structure, allowing it to reward shareholders while preserving cash liquidity for future growth and operational liabilities. The scheme was approved under Section 230 of the Companies Act, 2013, following unanimous support from the Board of Directors and requisite majorities from equity shareholders and unsecured creditors.
The tribunal order, certified and communicated via disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirms that the scheme is fair, reasonable, and not contrary to public policy. The company had previously received observation letters from BSE Limited and the National Stock Exchange of India Limited in July 2025, which were addressed during the proceedings. No objections were raised by the Regional Director or any other stakeholder during the hearing.
Bonus Issue Structure
Under the sanctioned scheme, Siyaram Silk Mills will issue preference shares by way of bonus utilizing its general reserves. The entitlement ratio is structured across two distinct series, both carrying a dividend rate of 9% per annum. The issuance details are as follows:
| Shareholder Holding | Series I Entitlement | Series II Entitlement | Face Value (Each) |
|---|---|---|---|
| 1 Equity Share (INR 2) | 4 Preference Shares | 3 Preference Shares | INR 10 |
Both Series I and Series II shares are cumulative, non-convertible, and redeemable. Series I shares are redeemable at par at the end of year 3 or earlier at the Board's option, while Series II shares are redeemable at the end of year 5 or earlier at the Board's option. There is no lock-in period for either series, and they will be listed on the stock exchanges where the company’s equity shares are traded.
Implementation and Compliance
The scheme becomes effective upon fulfillment of conditions precedent, including obtaining no-objection letters from stock exchanges and filing authenticated copies with the Registrar of Companies. The company must file the certified order with the RoC within 30 days of receipt. For shareholders holding physical certificates who do not provide demat account details before the Record Date, the corresponding preference shares will be held in trust by a nominee trustee until demat details are provided.
What the Numbers Show
The rationale behind the scheme highlights that Siyaram Silk Mills has accumulated substantial surplus reserves well above its current and likely future business needs. By converting these reserves into listed preference shares, the company aims to enhance corporate governance and transparency. Notably, the tribunal noted that even after this issuance, the company will retain sufficient cash resources to discharge liabilities towards lenders and stakeholders in the ordinary course of business, indicating a strong underlying liquidity position despite the capital restructuring.
Historical Stock Returns for Siyaram Silk Mills
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.41% | -3.12% | -2.95% | +18.24% | -6.51% | +47.50% |
How might the issuance of 9% cumulative preference shares impact Siyaram Silk Mills' weighted average cost of capital and overall profitability metrics in the medium term?
What are the potential implications for equity shareholders if the Board exercises its option to redeem Series I or Series II preference shares earlier than the stipulated 3-year or 5-year timelines?
How will this capital restructuring affect the company's debt-to-equity ratio and its ability to secure future financing for operational expansion or acquisitions?
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