Svarnim Trade Udyog Proposes 99% Share Capital Reduction to Address Accumulated Losses

Svarnim Trade Udyog Limited , a company listed on the BSE and Metropolitan Stock Exchange of India, has submitted a draft scheme to significantly reduce its paid-up share capital. The proposed reduction aims to address the company's accumulated losses and present a more accurate financial picture.

Key Points of the Capital Reduction Scheme

• Reduction Percentage: 99% of the current paid-up share capital
• Current Capital: Rs. 2.43 crore
• Proposed Capital: Rs. 2.43 lakh
• Amount to be Cancelled: Rs. 2.41 crore
• Purpose: To write off accumulated losses

Impact on Shareholders

The capital reduction will have a substantial impact on the company's share structure:

Shareholders will need to exchange 100 existing shares for 1 new share after the reduction.

Financial Context

The company's latest balance sheet data provides context for this decision:

The negative reserves and surplus, coupled with the unchanged share capital, indicate the need for financial restructuring.

Rationale and Implications

1. Balance Sheet Cleanup: The scheme aims to provide a more realistic view of the company's financial position by aligning the share capital with available assets.

2. Future Positioning: By writing off accumulated losses, Svarnim Trade Udyog may be better positioned for potential future growth or investment opportunities.

3. Shareholder Impact: While the reduction doesn't directly affect the proportional ownership of shareholders, it significantly reduces the number of shares they hold.

4. Regulatory Compliance: The company has submitted the draft scheme in compliance with SEBI regulations, specifically under Regulation 37(5)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

5. No Cash Outflow: The scheme does not involve any cash payout to shareholders or reduction in unpaid liabilities, focusing solely on internal financial restructuring.

It's important to note that this scheme is still in the draft stage and requires various approvals, including from shareholders and regulatory bodies, before implementation. Investors should closely monitor further announcements and seek professional advice if needed to understand the full implications of this corporate action on their investment.