THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.97 of 2011 (Dated : 26-07-2011) Between: M/s. Combat Drugs Limited Rep. by its Managing Director …Petitioner company THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.97 of 2011 ORDER: This company petition has been taken out under Sections 391 and 394 of the Companies Act, 1956 by M/s. Combat Drugs Limited seeking approval of the scheme of arrangement entered into with its shareholders and unsecured creditors with effect from 01.4.2010. 2. The petitioner company is a private limited company registered under the provisions of the Companies Act, 1956 on 17.9.1986, vide certificate of incorporation No.6781 of 1986-87. Later on, it was converted into Public Limited Company on 11.6.1992 and it changed its’ name from M/s.Combat Drugs Limited to M/s. Combat Drugs and Softech Limited and obtained a fresh Certificate of Incorporation, consequent upon change of name on 30.3.2000, from the Registrar of Companies. Thereafter, the company reverted back to its original name and obtained fresh certificate of incorporation consequent upon change of name on 01.2.2007. The registered office of the petitioner company is situated at 185/186, Yellampet, Medchal Mandal, R.R.District, Andhra Pradesh. 3. The authorized share capital of the company is Rs.4,00,00,000/- divided into 40,00,000 equity shares of Rs.10/- each. The present issued, subscribed and paid up capital of the company is Rs.3,23,14,000/- divided into 32,31,400/- equity shares of Rs.10/- each. 4. The main objects of the petitioner company are to carry on the business in all or any of their branches of manufacture, production, processing, packing, repacking, job work, wholesale or retail trade, agents, dealers, distributors, marketing import and export, warehousing, storage, depot operations, consignees, contractors, collaborators either on its own or on behalf of others, of Drugs, Pharmaceuticals, Chemicals, formulations, medical compositions and formulations etcetera, more fully described in para (5) of the petition. 5. The petitioner company sustained losses over a considerable period of time and thereby, losses accumulated to a tune of Rs.4,94,50,577/- as per the Audited Balance Sheet as on 31.3.2010. The said losses are stated to be pure business losses. The promoters and the management of the petitioner company were left with no alternative except to pump in the funds by themselves and partly from the identified co-promoters/investor group. The management of the petitioner company by way of infusion of funds out of their resources and partly by liquidating some assets cleared the outstanding loans due to the secured creditors namely Banks and as a consequence, the company became secured debt free apart from saving financial cost and interest. The Board of Directors of the petitioner company held several deliberations, negotiations and rounds of discussion and reached a conclusion that there is necessity to have a scheme of arrangement, compromise with the creditors and restructuring the capital as well as further issue of capital to set the process in motion to yield better results. The Board of Directors of the company at their meeting held on 11.10.2010 approved the scheme of arrangement between the petitioner company and it’s shareholders and secured creditors, subject to confirmation by this Court. The salient features of the scheme of arrangement have been set out in para (9) of the petition. 6. The petitioner company filed Company Application No.166 of 2011 seeking appointment of a Chairperson to convene the meeting of the shareholders and the unsecured creditors for the purpose of considering the proposed scheme of arrangement. This Court, by order dated 25.2.2011 passed in C.A.No.166 of 2011, appointed Sri Vattikuti Srimannarayana, a practicing advocate, as Chairman to convene the meeting of the shareholders as well as the unsecured creditors. Accordingly, the chairman conducted the meeting of the shareholders as well as the unsecured creditors after giving due notice by way of publication in “Business Standard” English daily, Hyderabad edition on 16.3.2011 and “Andhra Prabha” telugu daily of Ranga Reddy District Edition. As per the report of the Chairman, the shareholders as well as the unsecured creditors approved the scheme of arrangement. Hence, this application seeking sanction to the scheme of arrangement as approved by the Board of Directors of the company, shareholders and unsecured creditors. 7. The company petition came to be admitted on 27.4.2011. The petitioner was directed to take out notice of hearing of the petition to the Regional Director, Ministry of Corporate Affairs, Chennai and the Registrar of Companies, Hyderabad. The petitioner was also directed to take out publication in “Business Standard’ English daily and Andhra Prabha, Telugu daily, R.R.District edition. Accordingly, the petitioner took out publication and filed copies of the same. 8. The Regional Director (South Eastern Region) placed on record his report dated 25.7.2011. No objections have been raised by the Regional Director for the proposed scheme of arrangement. The primary object of the scheme of arrangement is infusion of additional funds into the company and to improve its’ operations, whereby repayment capacity of the company to the creditors would be enhanced. The promoters and the investors expressed their willingness to acquire the shares offered through the scheme of arrangement to enable the company to fulfill the objects of the proposed scheme. The object of issue of shares is to make the net worth of the company positive, buy new machinery, reduce/write off part of the accumulated losses, meet the working capital requirements and improve the working of the company. 9. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned have come forward to oppose the scheme. Since all the requisite compliances have been fulfilled, the Company Petition is allowed approving the `Scheme of Arrangement’. The petitioner company do lodge an authenticated copy of this order and the scheme duly authenticated by the Registrar of Companies, within 30 days from the date of this order. The petitioner company shall pay costs of Rs.5000/- to the Regional Director (South Eastern Region), Ministry of Corporate Affairs. Costs are to be paid within four weeks. _____________________ B.SESHASAYANA REDDY, J Dt.26-07-2011 RAR THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.97 of 2011 (Dated : 26-07-2011)