Balkrishna Paper Mills Limited's board of directors has approved a comprehensive scheme of reduction of share capital during a meeting held on December 23, 2025. The decision aims to address the company's accumulated losses of ₹278.39 crores and rationalize its capital structure to reflect its true financial position.

Board Meeting Outcomes

The board meeting, which took place from 2:00 PM to 6:00 PM at the company's registered office in Mumbai, resulted in several key approvals based on recommendations from the Audit Committee and Independent Directors.

The board approved various supporting documents including valuation reports from registered valuer M/s SSP & Co., fairness opinion from SEBI registered merchant banker M/s Rarever Financial Advisors Private Limited, and certification from statutory auditor DSM & Co.

Financial Restructuring Details

The scheme addresses the company's deteriorated financial position, with accumulated losses reaching ₹278.39 crores as of September 30, 2025. The company has incurred significant losses in its paper business operations, resulting in substantial erosion of net worth.

The restructuring involves a systematic process to adjust these accumulated losses against available reserves and share capital.

Capital Structure Changes

Under the proposed scheme, the company will implement significant changes to its capital structure:

Equity Share Modifications

• Face value reduction from ₹10 per share to ₹1 per share
• Number of shares remains unchanged at 3,22,19,532 equity shares
• Revised equity share capital: ₹3.22 crores
• No consideration payable to equity shareholders

Preference Share Treatment

• Complete cancellation of 1,10,00,000 preference shares of ₹100 each
• Total preference capital elimination: ₹110.00 crores
• Consideration to preference shareholders deferred until adequate funds available
• Amount recorded as unsecured non-interest-bearing loan

Loss Adjustment Mechanism

The accumulated losses will be systematically adjusted through the following process:

This structured approach ensures complete elimination of accumulated losses while maintaining equity shareholders' proportional holdings.

Regulatory Approvals Required

The scheme implementation depends on obtaining multiple statutory and regulatory approvals:

The management noted that the scheme benefits all stakeholders and will not adversely affect creditors, employees, or the company's ability to meet its obligations. The company is also evaluating new business opportunities, including real estate-related activities, as part of its strategic repositioning.

The board has approved a draft postal ballot notice for seeking shareholder approval through remote e-voting, marking the next step in the scheme's implementation process.

Balkrishna Paper Mills has reported a cybersecurity incident that impacted some of its IT assets. The company, however, assures that its operations remain unaffected by this event.

Incident Details

According to an official statement released by the company:

• The cybersecurity incident affected some IT assets within the organization.
• The company's technical team promptly responded to the situation and isolated the impacted assets.
• The incident did not disrupt Balkrishna Paper Mills' ongoing operations.

Company's Response

Balkrishna Paper Mills has taken the following steps in response to the incident:

• The technical team initiated necessary precautions and procedures immediately upon discovery.
• The company is currently examining the matter in detail.
• Appropriate actions are being taken to address and resolve the security breach.

Management Statement

Omprakash Singh, Company Secretary and Compliance Officer of Balkrishna Paper Mills, stated, "We would like to assure you that the technical team of the Company responded promptly and initiated necessary precautions and procedures. The Company is examining the matter and appropriate actions are being taken to address the incident."

Impact on Business

Despite the cybersecurity incident, Balkrishna Paper Mills has confirmed that:

• There is no impact on the company's day-to-day operations.
• Business activities continue to function normally.

Investor Considerations

While the company maintains that operations are unaffected, investors and stakeholders should note:

• The full extent of the breach and its potential long-term implications are still under investigation.
• The company's proactive disclosure and swift response demonstrate a commitment to transparency and security.

Balkrishna Paper Mills continues to monitor the situation closely and has promised to provide updates as necessary. The company's management remains focused on maintaining normal business operations while addressing this cybersecurity challenge.

Investors and stakeholders are advised to stay tuned for any further announcements from the company regarding this incident and its resolution.