UGRO Capital Limited's board of directors approved a significant corporate restructuring move on Thursday, January 8, by sanctioning the scheme of amalgamation of its wholly-owned subsidiary, Profectus Capital Private Limited (PCPL), with the parent company. This strategic merger represents a consolidation effort aimed at strengthening the company's market position and operational efficiency.

Regulatory Framework and Approval Process

The merger will be executed under the provisions of sections 230-232 read with Section 52 of the Companies Act, 2013. The amalgamation scheme requires comprehensive regulatory clearances before implementation.

Merger Structure and Implementation

Upon completion of the merger, the shares held by UGRO Capital in PCPL will be cancelled without any further consideration, effectively combining the transferor and transferee entities into a single operational unit. This structure ensures a seamless integration of both companies' assets and operations under the parent entity.

Strategic Rationale Behind the Consolidation

According to the company's exchange filing, the merger is designed to achieve multiple strategic objectives that will enhance the combined entity's market capabilities and operational efficiency.

Business Enhancement Objectives

• Stronger Combined Entity: Creation of a more robust organization with higher proportion of secured assets
• Market Expansion: Boost to emerging market and embedded finance business segments
• Operational Efficiency: Reduction in management overlaps and streamlined decision-making processes
• Cost Optimization: Lower legal and regulatory compliance costs through consolidated operations
• Human Capital Enhancement: Improved organizational capability through pooled human resources

Market Performance

Shares of UGRO Capital Ltd closed at ₹166.00 on the trading day, registering a decline of ₹0.61 or 0.37%. The stock movement reflects normal market fluctuations as investors assess the implications of the announced merger scheme.

The successful completion of this amalgamation will depend on securing all required regulatory approvals and stakeholder consents, marking a significant step in UGRO Capital's corporate restructuring strategy.

UGRO Capital Limited's board of directors has approved a comprehensive scheme of amalgamation with its wholly-owned subsidiary Profectus Capital Private Limited (PCPL) during a meeting held on January 8, 2026. The merger represents a strategic consolidation move aimed at enhancing operational efficiencies and strengthening the company's market position in the MSME financing sector.

Merger Details and Structure

The amalgamation scheme involves merging PCPL, a wholly-owned subsidiary, with UGRO Capital under Sections 230-232 read with Section 52 of the Companies Act, 2013. Upon completion, PCPL will be dissolved without winding up, and the shares held by UGRO Capital in PCPL will stand cancelled without any consideration being paid.

Business Alignment and Synergies

Both entities operate in complementary segments of the MSME financing space. PCPL is a non-deposit taking NBFC classified as middle layer NBFC, registered with RBI, providing secured lending to micro, small and medium enterprises. The company offers customized products with cluster-specific features and also undertakes factoring business on TReDS platform.

UGRO Capital specializes in MSME and Small Business Financing, providing a diversified portfolio including business loans, loans against property, machinery and equipment finance, and working capital support. The merger creates significant geographic and product alignment in secured loan against property and machinery finance segments.

Strategic Rationale

The board identified several key benefits from the amalgamation:

• Enhanced Asset Mix: The combined entity will feature higher secured assets, providing impetus to scale Emerging Market and Embedded Finance businesses
• Operational Synergies: Significant alignment in secured LAP and machinery finance facilitating operational efficiencies
• Cost Optimization: Reduction in management overlaps and elimination of legal and regulatory compliance costs
• Capital Efficiency: Optimal utilization of capital and enhanced operational management efficiencies
• Human Capital: Improved organizational capability through pooling of diverse skills and leadership

Regulatory Approvals and Timeline

The scheme requires comprehensive regulatory clearances before implementation. Key approvals needed include sanction from National Company Law Tribunal (NCLT), and clearances from stock exchanges, SEBI, RBI, shareholders, creditors, and other statutory authorities as required.

Additional Board Decisions

In a separate but significant decision, the board approved an increase in the borrowing limit for Commercial Papers from ₹500 crore to ₹800 crore. This enhancement in borrowing capacity, building on earlier board approval from April 26, 2025, will support the company's expansion plans and working capital requirements.

The board meeting, which commenced at 4:30 PM and concluded at 6:30 PM, also delegated powers to Principal Officers under Section 179 of the Companies Act, 2013. The approved scheme will be made available on the company's website at www.ugrocapital.com following submission to stock exchanges.