NCLT Hyderabad Clears Kalburgi Cement's ₹213.41 Crore Merger Deficit Adjustment Against Securities Premium

The National Company Law Tribunal (NCLT) in Hyderabad has approved Kalburgi Cement Private Limited's move to clean up a large merger-related loss, treating it as a legitimate internal corporate decision so long as creditors are safeguarded and the statutory framework is followed. A coram of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri has allowed the company to set off an amalgamation adjustment deficit of Rs 213.41 crore against its securities premium account, without any reduction in its paid-up share capital. Leaning on settled company law principles, the tribunal reiterated that courts should not lightly interfere in decisions on share capital reduction. "It has been held in the case of Reckitt Benckiser (India) Limited (2005) that the question of reduction of share capital is a domestic concern of the company, and if the same is approved by majority of shareholders, the Court will confirm it, except in situations like unfair or inequitable transaction or objection by creditors." Kalburgi Cement had turned to the tribunal after shareholders unanimously approved the proposal at an extraordinary general meeting in May 2025. The company pointed out that its audited accounts as on December 31, 2024, reflected a substantial deficit stemming from earlier merger transactions, and wanted to write it off so that its financial statements gave an accurate picture of its finanacials. The NCLT recorded that the company had followed the required procedures. Notices went out to creditors and regulators. The Regional Director and the Registrar of Companies raised only factual queries, which were dealt with through affidavits and additional reports. Most importantly, no unsecured creditor objected to the proposal. BNP Paribas, which already held a charge over the company's assets.After going through the record, the tribunal concluded that the company's request met the requsite standards. It observed that the reduction "appears to be fair and reasonable and is not contrary to public policy and does not violate any of the provisions of law." Allowing the petition, the NCLT approved cancellation of the Rs 213.41 crore amalgamation deficit and directed Kalburgi Cement to file the order with the Registrar of Companies and publish the required statutory notices within the prescribed timelines. Case Title: Kalburgi Cement Private Limited v. RoC and RD of Telangana Case Number: Company Petition IB/24/66/HDB/2025For the Applicant: Advocate Susri MulukalapellyFor Respondents: Ravi Metta, Deputy RoC Office, Gokulnath, Dy. Director, RD Office; Advocates Rakshita,B.Sapna Reddy for IT deptClick Here To Read/Download Order

NCLT Hyderabad Clears Kalburgi Cement's ₹213.41 Crore Merger Deficit Adjustment Against Securities Premium

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