News Corporate Actions Vaishno Cement Company Files Share Capital Reduction Scheme with NCLT to Write Off Accumulated LossesVaishno Cement Company Files Share Capital Reduction Scheme with NCLT to Write Off Accumulated Losses
Vaishno Cement Company Ltd has filed a scheme with NCLT under Section 66 of Companies Act 2013 to reduce its paid-up share capital by 90% from ₹8.95 crores to ₹89.50 lakhs. The restructuring aims to write off accumulated losses of ₹9.91 crores as of March 31, 2025, and involves reducing equity shares from 89,50,200 to 8,95,020 with shareholders receiving 1 share for every 10 held. The scheme requires shareholder approval through special resolution and NCLT sanction to enable better financial positioning and future fund raising opportunities.
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Vaishno Cement Company Ltd has submitted a detailed scheme to the National Company Law Tribunal (NCLT) for the reduction of its share capital under Section 66 of the Companies Act 2013. The comprehensive restructuring plan aims to address the company's substantial accumulated losses and restore its financial health.
Financial Position and Rationale
The company faces significant financial challenges with accumulated losses totaling ₹9.91 crores as per the audited financial statements for the year ended March 31, 2025. These losses have substantially eroded the value represented by the share capital, creating a mismatch between the company's capital structure and its actual financial position.
| Financial Parameter: | Amount (₹) |
|---|---|
| Current Paid-up Share Capital: | 8.95 crores |
| Accumulated Losses: | 9.91 crores |
| Proposed Capital Reduction: | 90% |
| Post-Reduction Capital: | 89.50 lakhs |
The scheme proposes to write off ₹8.06 crores of accumulated losses against the existing paid-up share capital. This restructuring will enable the company to present a more accurate reflection of its financial health in its balance sheet.
Capital Structure Transformation
Under the proposed scheme, the company's share capital structure will undergo significant changes. The current issued, subscribed and paid-up share capital of ₹8.95 crores comprising 89,50,200 equity shares of ₹10 each will be reduced to ₹89.50 lakhs divided into 8,95,020 equity shares of ₹10 each.
| Share Structure: | Pre-Reduction | Post-Reduction |
|---|---|---|
| Number of Shares: | 89,50,200 | 8,95,020 |
| Share Capital (₹): | 8.95 crores | 89.50 lakhs |
| Face Value per Share: | ₹10 | ₹10 |
| Reduction Ratio: | - | 1:10 |
Shareholders will receive one equity share for every ten shares held prior to the scheme implementation. Any fractional shares arising from the reduction will be rounded off to the nearest integers, with holdings of 0.5 shares or more rounded up.
Strategic Benefits and Impact
The management has outlined several strategic benefits expected from this capital reduction scheme. The restructuring will enable the company to explore new business opportunities that were previously constrained due to accumulated losses. It will also provide greater flexibility in raising funds from capital markets or financial institutions.
Key benefits include:
- Better representation of the company's true financial position
- Enhanced ability to pay dividends in accordance with applicable laws
- Improved market positioning for business activities
- Greater flexibility in fund raising from equity or debt markets
- Rational capital structure commensurate with business and assets
Regulatory Compliance and Approvals
The scheme requires approval from equity shareholders through a special resolution at a general meeting. Under Regulation 37 of SEBI (LODR) Regulations 2015, schemes solely providing for writing off accumulated losses against share capital on a pro-rata basis are exempt from certain regulatory requirements.
| Approval Requirement: | Status |
|---|---|
| Shareholder Approval: | Special resolution required |
| NCLT Sanction: | Application filed |
| Stock Exchange Filing: | Copy to be filed with BSE |
| RoC Filing: | Required post-NCLT approval |
The company's equity shares are currently listed on Bombay Stock Exchange Limited and Calcutta Stock Exchange. The listing benefits will continue post-restructuring, and the company will comply with applicable SEBI regulations.
Stakeholder Protection
The scheme document emphasizes that the capital reduction will not adversely affect the company's operations or its ability to honor commitments. Creditors, employees, and other stakeholders will not be negatively impacted, as the capital being written off has already been lost and is not represented by tangible assets. The shareholding pattern will remain unchanged, with all shareholders maintaining their proportionate ownership in the restructured entity.
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