NCLT Kochi Sanctions Scheme Of Amalgamation For Midas Group Of Companies

Brief Background

The Applicant companies are owned by Panampunna Family known as the ‘Midas Group’ and these companies had proposed a ‘Scheme of Amalgamation’ to synergize and consolidate their resources. The Board of Directors of the Applicant Companies had unanimously approved the Scheme of Amalgamation on 14.09.2021.

Under the Scheme of Amalgamation, the Transferor Companies were Sabari Rubber Pvt. Ltd., Parampuzha Treads Pvt. Ltd., Kaveri Treads Pvt. Ltd., Sona Rubber Pvt. Ltd., Peacock Rubbers Pvt. Ltd., Guardian Rubber Pvt. Ltd., Agro Trades and Services Pvt. Ltd., Ideal Rubber Pvt. Ltd., Midland Treads Limited, Midas Retreads India Pvt. Ltd., Zeus Rubber Pvt. Ltd. and Sumeru Rubber Pvt. Ltd. (hereinafter collectively (“Transferor Companies”) and the Transferee Company was Standard Treads Pvt. Ltd. (“Transferee Company”) into which all Transferor Companies were set to amalgamate.

Purpose of Amalgamation

The Transferee Company and the Transferor Companies are engaged in similar businesses of manufacture and sale of rubber products and operate within the same territory. The thirteen companies connected with this Scheme of Amalgamation operate under the same management of the Panampunna Family, popularly known as ‘Midas Group’. The Group business is being consolidated for optimum utilization of resources, and reduction of overhead costs and lessening the compliance burden. Further, the Scheme of Amalgamation would result in consolidation and streamlining of the Group’s businesses by ensuring a common shareholding pattern. The Scheme would end the cross holdings between the participating companies, which was a hindrance for the corporate restructuring of the Group businesses.

Application before NCLT Kochi

In February 2022, a joint application was filed under Sections 230-232 of the Companies Act, 2013 read with Rule 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, by the Transferor Companies and the Transferee Company, seeking direction for dispensation of the meeting of shareholders, secured and unsecured creditors, in view of the merger of the Applicant companies.

On 05.05.2022 the NCLT Bench allowed the application and dispensed the requirement of convening meeting of shareholders, secured and unsecured creditors for all the Applicant companies, except for Midas Retreads India Pvt. Ltd. and Standard Treads Pvt. Ltd., as few of their unsecured creditors had not given NOC/consent affidavits. Accordingly, a meeting was directed to be held for the unsecured creditors of these two companies on 16.06.2022.

Sanction of Amalgamation Scheme

When the application was listed for final disposal, the NCLT Bench observed as under:

“From a perusal of the materials placed on record, it appears that the Scheme of Merger annexed to this petition is a fair and reasonable one and does not violate any provisions of law, and is not contrary to public policy. As per the Scheme, the entire undertaking, assets, business, and liabilities of the Transferor Companies proposed to be amalgamated and stand vested with the Transferee Company as a going concern.”

The Bench has sanctioned the Scheme of Amalgamation and the same shall be effective from 01.04.2023 onwards.

Case Title: Sabari Rubber Private Limited and Ors.,

Case No.: CA (CAA)/1(KOB)/2022.

Counsel For the Petitioners: Mr. Nebil Nizar, Advocate.

Counsel For ROC: Mr. B Ramesh, AROC.

Counsel For Official Liquidator: Ms. Ambili B.

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