Precision Camshafts Limited (PCL) has received shareholder approval for a significant corporate action involving the disposal of a material subsidiary through insolvency proceedings. This decision, passed via a special resolution in a postal ballot, marks a notable development for the company.

Voting Results

The remote e-voting process, which ran from September 16 to October 15, saw strong participation from shareholders. Here's a breakdown of the voting results:

The total votes polled represented 66.18% of the company's outstanding shares, indicating significant shareholder engagement in this crucial decision.

Key Highlights

• Special Resolution: The proposal to dispose of 100% shareholding in a material subsidiary through insolvency proceedings was passed as a special resolution.
• Overwhelming Support: The resolution received near-unanimous support, with 99.98% of votes cast in favor.
• Promoter Backing: All votes from the promoter and promoter group, holding 62,092,363 shares, were cast in favor of the resolution.
• Institutional Support: Public institutions, with 406,807 shares, also showed unanimous support for the proposal.
• Strong Public Approval: Public non-institutional investors demonstrated 98.26% support for the resolution.

Compliance and Transparency

PCL has adhered to regulatory requirements by conducting the postal ballot in accordance with the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements Regulations, 2015. The company appointed an independent scrutinizer, Jayavant B. Bhave of J. B. Bhave & Co., Company Secretaries, to oversee the voting process and ensure its fairness and transparency.

Implications

This shareholder approval paves the way for Precision Camshafts Limited to proceed with the disposal of its material subsidiary through insolvency proceedings. While the specific reasons for this decision were not detailed in the available information, such actions are typically undertaken as part of strategic restructuring or to address financial challenges within the group.

Investors and stakeholders will likely be watching closely to see how this move impacts PCL's operations and financial position in the coming months. The strong shareholder support suggests confidence in the management's decision-making and strategy for the company's future direction.

As the process unfolds, Precision Camshafts Limited is expected to provide further updates to the stock exchanges and shareholders regarding the implementation of this resolution and its impact on the company's overall business structure.

Precision Camshafts Limited (PCL), a leading manufacturer of camshafts, has announced plans to initiate insolvency proceedings for its German subsidiary, MFT Motoren und Fahrzeugtechnik GmbH (MFT). The company is seeking shareholder approval through a postal ballot for this significant corporate action.

Financial Distress Prompts Insolvency Move

MFT, a material step-down subsidiary of PCL, has been facing persistent financial difficulties. The economic slowdown in Europe has severely impacted MFT's business outlook, with significantly reduced customer call-offs from prominent clients. This has resulted in an immediate and severe impact on the company's cash flows, particularly from June to August.

Shareholder Approval Sought

PCL has issued a postal ballot notice to seek shareholder approval for disposing of its 100% shareholding in MFT by initiating insolvency proceedings. This move is in accordance with Regulation 24(5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which requires a special resolution for such actions involving material subsidiaries.

E-Voting Details

Shareholders can cast their votes electronically from September 16 to October 15. The results of the postal ballot will be announced on or before October 17.

Implications of Insolvency

Upon completion of the insolvency and liquidation process, MFT will cease to exist and will no longer be a subsidiary of Precision Camshafts Limited. This decision comes as MFT faces acute liquidity constraints, making it unable to sustain operations.

Management's Perspective

Yatin S. Shah, Chairman and Managing Director of Precision Camshafts Limited, stated in the notice, "The Board recommends passing of the Special Resolution to authorize the initiation of insolvency proceedings for MFT under prevailing German laws, given the subsidiary's inability to meet its obligations due to the current economic climate."

Next Steps

If approved, the Board of Directors will be authorized to:

1. Initiate insolvency proceedings for MFT under German law
2. Appoint an insolvency professional in Germany to carry out the process
3. Acknowledge the cessation of control over MFT upon completion of insolvency/liquidation
4. Undertake necessary filings, disclosures, and actions in compliance with Indian and foreign laws

The move underscores the challenges faced by international subsidiaries in the current global economic environment and PCL's strategic decision to address these issues through legal proceedings.