THE HON'BLE Ms. JUSTICE G.ROHINI COMPANY APPLICATION Nos. 336 and 337 of 2011 Dated: 29.03.2011 M/s. Lakshmi Gayatri Industries Private Limited, Hyderabad. …Applicant THE HON’BLE Ms. JUSTICE G. ROHINI COMPANY APPLICATION Nos. 336 and 337 of 2011 COMMON ORDER : These two applications are filed by M/s. Lakshmi Gayatri Industries Private Limited hereinafter referred to as the first transferor company seeking to dispense with the convening of the meeting of its shareholders and to convene the meeting of the secured creditors for the purpose of consideration of the proposed amalgamation of M/s. Lakshmi Gayatri Industries Private Limited, M/s. Glade Steel Private Limited, M/s. Sri Ganga Steel Enterprises Private Limited, M/s. Topaz Steel India Limited (transferor companies) with M/s. Sujana Metal Products Limited (transferee company). M/s. Lakshmi Gayatri Industries Private Limited herein after referred to as “GIPL”/first transferor company was originally incorporated under the name and style of M/s. Lakshmi Gayatri Iron & Steel Private Limited on 20th February, 2003 in the state of Andhra Pradesh under certificate of incorporation No.01-40538 of 2002-2003 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. Later on the name of the company was changed to its present name i.e. M/s. Lakshmi Gayatri Industries Private Limited after complying with necessary formalities under the Companies Act, 1956 and a fresh certificate of incorporation consequent on the conversion under Section 21 of the Companies Act, 1956 was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on 1st April, 2009. The registered office of the “LGIPL”/first transferor company is situated at 1- 9-61/1, Microwave tower, Bye-pass road, Suryapet, Nalgonda District- 508213. The present authorized share capital of the “LGIPL”/first transferor company is Rs. 22,00,00,000/- divided into 2,20,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the company is Rs.3,85,26,980/- divided into 38,52,698 equity shares of Rs.10/- each fully paid. M/s. Glade Steel Private Limited hereinafter referred to as “GSPL”/second transferor company is incorporated on 12th May, 2005 in the State of Andhra Pradesh under certificate of incorporation No., 01-46213 of 2005-2006 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. The Registered office of the “GSPL”/second transferor company is situated at Plot No.18, Nagarjuna Hills, Panjagutta, Hyderabad –500 082. The present authorized capital of the “GSPL”/second transferor company is Rs.25,00,00,000/- divided into 25,00,000 equity shares of Rs.100/- each. The issued, subscribed and paid up capital of the company is Rs.13,18,84,400/- divided into 13,18,844 equity shares of Rs. 100/- each fully paid up. M/s. Sri Ganga Steel Enterprises Private Limited, hereinafter referred to as “SGSEPL”/third transferor company was incorporated on 3rd May, 1999 in the State of Tamil Nadu under certificate of incorporation No.18-42380 of 1998-99 issued by the Registrar of companies, Tamil Nadu, Chennai. The company had shifted its registered office from the state of Tamilnadu to the State of Andhra Pradesh by altering the provisions of its memorandum of understanding with respect to the place of the registered office and such alteration conformed by an order of company law board(Southern Region Bench), Chennai dated 17.02.2011. the certified copy of the said order of company law board confirming transfer of the registered office was registered by the Registrar of Companies, Andhra Pradesh, Hyderabad. The registered office of the “SGSEPL”/third transferor company is situated at plot No.18, Nagarjuna Hills, Panjagutta, Hyderabad-500 082. The present authorized capital of the “SGSEPL”/third transferor company is Rs.35,00,00,000/- divided into 3,50,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the company is Rs.32,11,44,740/- divided into 3,21,14,474 equity shares of Rs.10/-each fully paid up. M/s. Topaz Steel India Limited hereinafter referred to as “TSIL”/fourth transferor company was originally incorporated under the name and style of M/s. Topaz Calcination India Limited on 12th January, 1996 in the state of Andhra Preadesh under certificate of incorporation No.01-22887 of 1995-96 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. Later on the company had changed its name to M/s. Topaz Steel & Calcination India Limited after complying with necessary formalities under the Companies Act, 1956 and a fresh certificate of incorporation consequent on the conversion under Section 21 of the Companies Act, 1956 was issued by the Registrar of Companies, Andhra Pradeshy, Hyderabad on 29th January, 2004. Again the company has changed its name to its present name i.e. M/s. Topaz Steel India Limited and a fresh certificate of incorporation consequent on the change of name under Section 21 of the Companies Act, 1956 was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on 6th May, 2008. The registered office of the “TSIL” company situated at 247, III Floor, Dwarakapuri Colony, Panjagutta, Hyderabad-500 082. The present authorized capital of the “TSIL” company is Rs.15,00,00,000/- divided into 1,50,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up capital of the company is Rs.11,05,23,030/- divided into 1,10,52,303 equity shares of Rs.10/- each fully paid up. Apart from the above there is a share application money pending allotment to an extent of Rs.4,59,71,088/-. M/s. Sujana Metal Products Limited hereinafter referred to as “SMPL”/transferee company was originally incorporated on 2nd May, 1988 vide certificate of incorporation No.01-08610 under the name and style of Sujana Steel Re-rolling Industries Private Limited. Later on the company changed its name from Sujana Steel Re-rolling Industries Private Limited to Sujana Steels Private Limited after passing necessary resolution under Section 21 of the Companies Act, 1956, a fresh certificate of incorporation consequent on change of name was issued by Registrar of companies, Andhra Pradesh, Hyderabad on 30th March, 1992. again the company was converted into a Public Limited Company by passing special resolution under Section 21 of the Companies Act, 1956 on 04.04.1992. Again, Sujana Steels Limited had changed its name to its present name to Sujana Metal Products Limited after passing necessary resolution under Section 21 of the Companies Act, 1956 on 28.09.2001 and a fresh certificate of incorporation consequent on change of name was issued by the Registrar of Companies on 19th November, 2001. The registered office of the “SMPL” company is situated at Plot No.18, Nagarjuna Hills, Panjagutta, Hyderabad-500 082, Andhra Pradesh. The authorized share capital of “SMPL” company is Rs.200,00,00,000/- divided into 32,00,00,000 equity shares of Rs.10/- each and 40,00,000 cumulative redeemable preference shares of Rs.100/- each. The issued, subscribed and paid-up capital of “SMPL” is Rs. 98,17,54,405/- divided into 19,63,50,881 equity shares of Rs. 10/- each fully paid up and 14,93,365 cumulative redeemable preference shares of Rs.100/- each. The audited balance sheets of the transferor companies as well as the transferee company are enclosed to the applications as annexures. It is stated that the transferor companies and the transferee company are engaged in the business of manufacturing and marketing value added steel products. The transferor and transferee companies require similar raw materials, consumables, spares etc., As a result of amalgamation of transferor companies with transferee company, the requirement of the raw materials, consumables and spares of the combined entity will be two to two and half times of the individual entities which enables the combined entity to procure the same in the international market at better prices and at competitive terms and also the combined entity will have wider procurement options including from the overseas market. Further by combining these units it will meet the competition in the domestic and international market and also helps to meet the international standards. Further the proposed amalgamation will also reduce the inventory levels which will result in significant savings in procurement of inventory and carrying costs of the inventory. Further by proposed amalgamation there will be synergy of operations and also reduce the overhead and administrative costs substantially which will be not only beneficial to its shareholders but also to the employees and creditors and public at large. In view of the advantages of amalgamation, the Board of Directors of the transferor and transferee companies at their respective board meetings held on 12th November, 201 approved the scheme of amalgamation of the transferor companies with the transferee company with effect from 01.10.2009 (appointed date) subject to the approval/consent of the shareholders and confirmation by this Court. A copy of the proposed scheme of amalgamation has been enclosed to the applications and the salient features have also been enumerated in the affidavit filed fin support of the applications. It is stated that there are only two shareholders in the applicant company-first transferor company and they are interested in the scheme of amalgamation and they have also given their no objection for the proposed scheme of amalgamation by means of affidavits. It is further stated that the applicant company-the first transferor company has availed secured loans towards its term loan and vehicle loan from various Banks and it had also availed unsecured loans from its Director and body corporates. So far as unsecured creditors are concerned, the no objection letters received from them have been enclosed to the application as Annexure-13. While stating that no investigation or proceedings are pending under Section 335 and 337 and other provisions of the Companies Act, 1956 against the transferor and transferee companies, C.A.No.336 of 2011 has been filed to dispense with the convening of the meeting of the shareholders of the applicant company taking into consideration the no objection given by them bay way of affidavits. In C.A.No.337 of 2011 the applicant company seeks a direction for convening of the meeting of the secured creditors of the applicant company. I have heard the learned counsel for the applicant company. As could be seen from the material placed before this Court, there are only two shareholders in the applicant company and both of them have given their positive consent to the proposed scheme of amalgamation by means of affidavits, which are enclosed to the application as annexure A.12 from pages 322 to 328. Having regard to the consent given by the two shareholders, there is no need for convening of the meeting of the shareholders for the purpose of considering the proposed scheme of amalgamation. Accordingly, C.A.No.336 of 2011 is allowed and the meeting of the shareholders of the applicant company is hereby dispensed with. So far as C.A.No.337 of 2011 is concerned, there shall be a direction to convene and hold the meeting of the secured creditors of the applicant company on 28.04.2011 at 4.30 p.m. at Anjuman Hall, Taj Banjara, Road No.1, Banjara Hills, Hyderabad-500 034. Sri P.V.Rama Raju, 5-3-236/1, Plot No.21, Road No.3, Venkatarao Nagar Colony, Kukatpally, Hyderabad 500 072, a practicing Advocate of this Court is hereby appointed as Chairman for the said meeting and his fees is fixed at Rs.25,000/- (Rupees fifty thousand only). The quorum for the said meeting shall be ‘2’, who shall be present in the meeting either in person or through their proxies. The notice of intended meetings shall be published in two daily newspapers namely ‘Business Standard’ (English Daily, Hyderabad Edition) and ‘Andhra Bhoomi’ (Telugu Daily, Hyderabad Edition) published from Hyderabad. For the purpose of considering the report of the Chairman of the meeting of the secured creditors, call on 30.04.2011. Accordingly, C.A.No.336 of 2011 is allowed as prayed for and C.A.No.337 of 2011 shall be posted on 30.04.2011 for consideration of the report of the Chairman. _____________ G. ROHINI, J Date: 28.03.2011 KLP