HON’BLE SRI JUSTICE G.V.SEETHAPATHY COMPANY PETITION No.102 OF 2010 MONDAY, THE NINETEENTH DAY OF JULY TWO THOUSAND AND TEN IN THE MATTER OF THE COMPANIES ACT, 1956 (1 OF 1956) AND IN THE MATTER OF SECTIONS 391 AND 394 OF THE COMPANIES ACT, 1956 AND IN THE MATTER OF DR.REDDY’S LABORATORIES LIMITED WITH IN THE MATTER OF SCHEME OF ARRANGEMENT BETWEEN DR. REDDY’S LABORATORIES LIMITED AND ITS MEMBERS Dr.Reddy’s Laboratories limited, a Company incorporated under the Companies Act, 1956 and having its registered office at 7-1-27, Ameerpet, Hyderabad, Andhra Pradesh – 500 016 Rep. by its Company Secretary V.S.Suresh ….Petitioner Company HON’BLE SRI JUSTICE G.V.SEETHAPATHY C.P.No.102 OF 2010 ORDER: This petition is filed under Sections 391 and 394 of the Companies Act, 1956 praying that the scheme of arrangement as proposed by the shareholders of the company be sanctioned and confirmed by the Court. 2. Heard the leaned counsel for the petitioner company and the learned Assistant Solicitor General, representing the Regional Director, Ministry of Corporate Affairs, Chennai and Registrar of Companies, Hyderabad. Perused the records. 3. The petitioner company was originally incorporated under the name and style of ‘Dr.Reddy’s Laboratories Private Limited’ on 24-02-1984. Subsequently, it was converted into a public limited company and a fresh certificate of incorporation was obtained on 06-12-1985 and consequently the name was also changed to ‘Dr.Reddy’s Laboratories Limited.’ The registered office of the company is situate at Ameerpet, Hyderabad. The present authorized share capital of the company is Rs.120 crores, divided into 24 crores equity shares of Rs.5/- each. The issued capital is Rs.84,42,27,925/-, divided into 16,88,45,585 equity shares of Rs.5/- each. The present subscribed and paid up capital of the company is Rs.84,42,26,925/-, divided into 16,88,45,385 equity shares of Rs.5/- each. 4. The petitioner company is presently engaged in the business of formulations, active pharmaceutical ingredients and intermediate generics biotechnology, customer pharmaceutical services etc. 5. The objects of the petitioner company, in detail, are set out in the memorandum of association and they are extracted in the petition. 6. The petitioner company proposed a scheme of arrangement to restructure its general reserve by issuing unsecured, redeemable, unconvertible, fully paid up bonus debentures to its members. According to the petitioner, the company has built up significant reserves from its retained profits by transfer to its general reserve and the capital represented by its general reserve is in excess of the company’s current and anticipated operational needs. The petitioner company expects that its business operations will continue on a high trajectory and generate incremental cash over the next few years. While the excess reserves can be profitably utilized for the petitioner company’s overall growth strategy, the company believes that even after considering the foreseeable investments required for such opportunities over the next few years, its reserves as aforesaid will be in surplus to its needs. As the petitioner company has recently completed 25 years and is also keen to reward its members for their support and belief, the petitioner company, therefore, intends to optimally utilize its surplus reserves by giving its members access to the same. The board of directors of the company at its meeting held on 31-03-2010 approved the scheme of arrangement, subject to approval by the members of the company and confirmation by this Court. Earlier, the petitioner company filed C.A.No.286 of 2010 seeking appointment of Chairperson to convene the meeting of the shareholders of the petitioner company for the purpose of considering the proposed scheme of arrangement. This Court by order dated 21-04-2010 appointed Sri S.V.Ramana, Advocate as Chairperson. The learned Chairperson convened and conducted the said meeting of the shareholders and filed his report, wherein it is stated that the shareholders, who attended the meeting, voted in favour of the proposed scheme of arrangement. The said application was accordingly closed. 7. While admitting this petition on 09-06-2010, notice was issued to the Regional Director, Ministry of Corporate Affairs, Chennai and Registrar of Companies, A.P., Hyderabad. The petitioner was also directed to take publication in 'Andhra Prabha’ Telugu daily and ‘Business Standard’ English daily of Hyderabad editions. The learned Assistant Solicitor General representing the Registrar of Companies filed a common affidavit stating no objection for the proposed scheme of arrangement. No objections were also received from any quarter in response to the general notice published in the above newspapers. The secured and unsecured creditors have also stated no objection for the proposed scheme of arrangement and the certificates of no objection from the creditors were also filed. 8. The salient features of the scheme of arrangement, as set out in the scheme enclosed to the petition as Annexure ‘D’, were also extracted in the petition. The verified petition is supported by an affidavit furnished by Sri V.S.Suresh, Company Secretary of the petitioner company. 9. In the circumstances set out in the petition and having considered the proposed scheme of arrangement and its objectives and the board of directors and the shareholders in their respective meetings having approved the same, the secured and unsecured creditors expressing no objection for the scheme and no objections having been received from any quarter and the Registrar of Companies also stating no objection for the scheme, it is considered and held that the proposed scheme of arrangement, envisaging restructuring of the general reserve by issuing unsecured, redeemable, non- convertible, fully paid up bonus debentures to its members, can be sanctioned and is accordingly sanctioned. 10. The petitioner company shall, within 30 days of receipt of a copy of this order, deliver the same to the Registrar of Companies, A.P., Hyderabad, for registration and consequential action. 11. In the result, the company petition is ordered accordingly. There shall be no order as to costs. ____________________ G.V.SEETHAPATHY, J 19th July 2010. Lrkm.