Ashima Ltd — Regulatory Filings 2020

Jul 24, 2020

Regd. Office : Texcellence Complex, Near Anupam Cinerna, Khokhra, Ahmedabad ' 380 0111, lndie Phone : |1-7947777OOO r Fax z 91-7*22773061 o E<nell : tcxccllcnc.O.diru.-in CIN No : 199999Gr1982P1C005253

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To, BSE Limited Corporate Relationship Department, zSftFloor,PJTowers, Dalal Street, Fort, Mumbai - 400001 SECURITY CODE NO. 514286

To, National Stock Exchange of India Ltd Exchange Plaza sth Floor, Plot no. C/1, G Block, Bandra Kurla Complex, Bandra [EastJ, Mumbai - 400051 SECURITY CODE NO. ASHIMASYN

Dear Sirs,

Sub: Intimation under Regulation 30(71 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Update on the Scheme of Amalgamation and Arrangement

We would like to inform you that Hon'ble National Company Law Tribunal, Ahmedabad Bench ('NCLTI has by pronouncement made on22,a 1uly,2020, sanctioned the Scheme of Amalgamation and Arrangement between Ashima Dyecot Private Limited ("Transferor Company") and Ashima Limited ("Transferee Company") and their respective shareholders and creditors pursuant to the provisions of Section 230-232 and other applicable provisions of the Companies Act, 2013 and rules made there under ('The Scheme"J.

A copy of the Order of the NCLT sanctioning the Scheme ("Order"J, as uploaded on the website of NCLT, is enclosed herewith for your records.

The Scheme will be effective from the date on which certified copy of the afore-mentioned sanction order of Hon'ble NCLT is filed with Registrar of Companies, Gujarat ["ROC"). The effective date will be communicated to the Stock Exchanges for further public dissemination as and when the sanction order is filed and the Scheme becomes effective.

You are requested to take the same on your record.

Ahmedabad

Thanking You

Yours Faithfully

For Ashima Limited

Hi Encl : As above EX E Company

Visit us at http//www,ashima,in

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T c E N c

NATIONAL COMPANY tAW TRIBUNAL AHMEDABAD BENCH AHMEDABAD Court 2

CP(CAA) No. 17 of 2020 In CA(CAA) 18/NCLT/AHM/2020

Coram: HON'BLE Ms. MANORAMA KUMARI, MEMBER JUDICIAL

ATTENDANCE.CUM-ORDER SHEET OF THE HEARING OF AHMEDABAD BENCH OF THE NATIONAL COMPANY LAW TRIBUNAL ON 22.07.2020

Name of the Company: Ashima Dyecot Pvt Ltd Ashima Ltd

Section: (artian ??A-2?2 r A nl+ 6r^rnh1ni6c A.t h 2013

1

ORDER

(Through Video Conferencing)

None present

The order is pronounced in the open court, vide separate sheet

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MANORAMAKUMARI MEMBER (JUDICIAL)

Daled this the 22rd day ofJuly,2020

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I{ATIONAL COMPANY I,I\W TRIBUNAL, BENCH AT AHMEDAAAD

C.P. (CAAI No. 1IIIICLT/AHNU2O2O IN c.A. (CAAI IIo. \alNcLT/AH Il2o2o

In the Eatter oft-

AsblEa Dyecot Prlvate LlElted,

A company incorporated under the provisions of the Compalies Act, 1956 and having its registered office at Texcellence Complex, Near Anupam Cinema, Khokhara, Ahmedabad - 380 O21.

Petltloner Transferor Company

AND

Aablma Llmlted,

A company incorporated under the provisions of the Companies Act, 1956 and having its registered ofhce at Texcellence Complex, Near Anupam Cinema, Khokhara, Ahmedabad - 38O 021.

.... Petitioner Traneferee Company

Order deuvered oa 22nd Jlly, 2O2O

Coram: Hon'ble Ms, Manorama Kumarl, Member (Jl

ApDearance: None Present.

ORDER

[Per se: Ms. Manorama Kumarl, Member (Judicial]

• The instant joint petition is filed by the petitioner companies under Section 23O and 232 read with Section 66 and other applicable provisions of ttre Companies Act, 2013 seeking sanction of a Scheme of Arrangement in the nature of Amalgamation of Ashima Dyecot Private Limited with Ashima Limited. I
• It is submitted that both the companies belong to the same group of Management viz. Ashima Group. The Transferee Company is engaged in manufacturing of "Cotton Fabric Products" while the Transferor Company is engaged in the business of "processing textile fabrics" and manufacturing of "readymade garments". Thus, the business of the 2

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Transferor and Tralsferee Company are complementary to each other. The proposed amalgamation of Transferor Company into Transferee Company shall result into several advantages to both the companies and their stakeholders. Some of them are as under:

• Consolidate the portfotio oI brands and products that are relevant to the "textile secto/ under a single roof;
• Enable the merged entity to cater to the needs of entire value chain from fabrics to garments.
• Operational synergies and efficiency for the merged entity.
• Greater integration and greater financial stlength and fledbility to result in maximizing overall shareholders value;
• Enhancing the scale of operations, reduction in overheads, including administrative, statutory compliances, managerial and other expenditure, operational rationalization, organizational efficiency, and optimal utitization of resources by avoiding duplication of efforts;
• The requisite report confirming tl.e proposed Share Entitlement Ratio of Equity Shares, being just and reasonable was provided by M/s. N. S. Kumar & Co., Independent Chartered Accountants and Niraljan Kumar, Registered Valuer, The Fairness Opinion was provided by M/s. Kunvarji Finstock Private Limited, Category I Merchant Banker. The Statutory Auditors of the Traisferee Company have confirmed the compliance of applicable accounting standards for the accounting treatment proposed under the said scheme.
• 1. Ashima Limited, the Transferee Company being a listed public limited company, the approval was hrst obtained from the Audit Committee on 19m October 2O19 and thereafter, the same was placed before the respective Board of Directors of all the cbmpanies. The resolutions dated lgth October 2019 were passed by the Board of Directors of both the Petitioner Companies. The Scheme was thereafter presented to concerned stock exchanges and the observation letters dated 10m January, 2O2Q were respectively obtained from BSE Limited and National Stock Exchange of India Limited.
• The Petitioner Companies filed joint application being CA (CAA) No. 18 ot 2O2O with a prayer to convene separate meetings of Equity Shareholders, Secured Creditors and Unsecured Creditors of both the 4

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Applicant Companies and Preference Shareholders of the Applicant Transferee Company. Hence, vide the order dated 30e January 2020, passed in CA (CAA) No. 18 of 2O2O, Lh.e directions were issued for convening the above referred meetings of Applicant companies to obtain their approval to t}le proposed scheme. Furtier directions were also issued for the service of notice as well as publication of t}le notice in the newspapers. The Petitioner Companies complied with the said directions.

• 1. In view of the directions so issued, notices of the meetings were sent individually to all the concerned Equity Shareholders, Preference Shareholders, Secured Creditors and Unsecured Creditors of the petitioner companies on or before 6s February 2020; together with a copy of the Scheme of Arrangement and the Explanatory Statement as well as all other requisite disclosures. The notice convening the meetings were also advertised in 'Indian Express' and Gujarati daily 'Sandesh' as well as 'Gujarat Samachar'Ahmedabad editions for all the meetings, on 8th February 2O2O; "fhe affidavit dated 146 February 2O2O was filed by the Chairman of the said meetings confirming the compliance of the directions. The aforesaid meetings were duly convened and hetd at Ahmedabad on 116 March 2O2O and the Chairman appointed for the said meetings reported the result of the said meetings to this Tribunal vide the affidavit dated 16e March 2O2O.
• 6.(t) ln case of Ashima Limited, perusal of the Chairman's report confirms the cumulative approval of t}Ie scheme by requisite majority of 97 .77 7o in numbers and 90.32 %o in value, who exercised their right to vote through different modes made available, viz. remote e-voting and voting by physical ballots at the meeting. Further, the number of votes cast by the Public Shareholders in favour (i.e. 1,11,12,808 votes) of the resolution approving the proposed Composite Scheme of Arrangement were more than the number of votes cast against it (i.e. 95,73,362 votes) by the Public Shareholders, thereby approving.the resolution as required as per SEBI Circular CFD/DIl3/ClRl2Ol7 121 dated lOth March, 2017, by requisite majority of 53.72 o/o.

The scheme was approved unanimously by the Preference Shareholders, Secured Creditors as well as Unsecured Creditors of the said Transferee Company at t-he respective meetings.

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• (ii) In case of Ashima Dyecot Private Limited, the petitioner Transferor Company, perusal of the Chairman's report confirms ttte unanimous approval granted to the proposed Scheme from the Equity Shareholders, Secured Creditors as well as Unsecured Creditors at the respective meetings.
• 7 In view of the aforesaid order dated 3Ot January 2020, the original Applicant companies were also directed to serve Notice of the Scheme to the Regulatory Authorities-viz. (i) Central Govt. through the Regional Director, North-Western Region, (iil Registrar of Companies, Gujarat, (iii) concerned Income Tax Authorities; and upon (iv) The Reserve Bank of India; and (v) BSE Limited; (vi) National Stock Exchange Limited and (vii) Securities and Exchange Board of lndia only in case of Ashima Limited, the Transferee Company, and (viii) the Official Liquidator for Ashima Dyecot Private Limited, the Applicant Transferor Company, along with Notice, Explanatory Statement and other requisite documents and disclosures. The notices were duly served on all the authorities on or before 1lth February 2O2O. 'fhe allidavit dated 13tn February 2O2O conhrming the compliance of the said directions for service of Notice on all the above Regulatory Authorities along with the acknowledgments for t}te same was hled with this Tribunal. In response to the said notice, the Regional director frled representation in form of an alfidavit dated 28s Pebrua5r 2O2O, the OIIice of the Olhcial Liquidator filed representation in form of report dated 3rd June 2O20. A letter dated 25ft February 202O was addressed by Reserve Bank of India. No Representations were received from the Income Tanr Authorities or any other regulatory authority for any of the companies.
• The joint petition was filed on 196 March 2020 arrd was admitted on 16s June 2O2O. The date of hearing was fixed as 15s July 2020. Directions were issued to publish Notice of Hearing of Petition in the newspapers viz. English daily, 'lndian Express' and Gujarati daily 'Sandesh' as well as Gujarat Samachar' Ahmedabad editions for both ttte companies, at least before 10 days of the date of hearing of the petition. Further directions were also issued to serve notice of hearing of the petition to the statutory authorities' viz. (i) Central Govt. through Regional Director- North Western Region, (ii) Registrar of Companies, (iii) Income Tax authorities, and (iv) Official Liquidator at least before 1O days of the date of hearing of the petition. 8

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• 9 Pursuant to the directions, notices were duly served by the petitioner companies on the statutory authorities on or before 24th June 2O2e and publications were duly made in the newspapers- on 26th June 2O2O. T}re affidavit of service and publication dated 30u June 202O confirming the same has been placed on record.
• 1. The Petitioner Companies, on receipt of the representation of Regional Director and Omcial Liquidator, have filed a common additional a{lidavit on 25u June 2020 in response to the aforesaid representations which is/are as under:
  • (i) It has been submitted that Para 2 (a), (b) and (e) of the representation of the Regional Director deals with the factual aspects viz. Service of Notice for the proposed Scheme, nature of the proposed Scheme, the proposed Exchange Ratio as recommended by independent Chartered Accountants and Rationale for the Scheme.
  • (ii) Para 2 (c) of the alndavit, refers to the proposed consolidation of the Authorized Share Capitat of the Transferor Company with that of the Transferee Company as envisaged under clause 12 of the Scheme. It is observed by the Regional Director that under Section 232 l3l (l of the Companies Act, 2013, the Transferee Company shall get the set off for t.I.e amount of fees paid by the Transferor Company. In view of the same, the Transferee Company will be required to pay the difference of amount of fees payable on the enhanced Authorized Capital as on date and tIe actual amount of fees paid by both the Petitioner Companies at the relevant point of time. In this regard, it has been undertaken by the petitioner Transferee Company to pay such difference, as applicable, for the amount of fees payable as on date on the proposed enhancement of Authorized Capital of Rs. 58,98,OO,OOO/-
  • (iii) Para 2 (d) of the afndavit, refers to the insuffrciency of the Authorized Capital of the Petitioner Transferee Company for the issue of its new shares to the shareholders of the petitioner Transferor Company in terms of Clause 13 of the Scheme. In this regard, it has been submitted that upon Scheme being effective, the company shall first consolidate the Authorized Capital of the petitioner Transferor

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c.P. (CAAI l{o. 17lNcLT/AHNtl2O2O IN C.A. ICAAI !Io. |al NCLT/AIINU 2O2O

Company with that of the Petitioner Tra;rsferee Company. It is further provided vide clause 13.11 and 13.12 of the Scheme, that the Authorized Capital of the Transferee Company shall be increased to the required extent by following the requisite procedure envisaged under the Companies Act and payment of applicable duty and registration fees etc.

• (iv) The Regional Director vide Para 2lfl refers to the compliance with the applicable SEBI circulars by the petitioner Transferee Company, viz. Ashima Limited being a listed company. In this regard, it has been submitted that the said Transferee Company has complied with all applicabte requirements of the said circulars. It has been further confirmed that in compliance with the applicable SEBI Circular, the said Scheme has been approved by the requisite majority of the Public shareholders. The said fact has been conhrmed by the Chairman of the meeting; vide Chairman's report dated l6e March 2O20. The Petitioner Transferee Company has also undertaken to comply with the post scheme requirements of the said circulars as mentioned in the sanction letters of BSE and NSE.
• (u) Para 2 (g) of the affidavit refers to the investments made by foreign shareholders in case of both the petitioner companies, which being part of the record of the company are not disputed. However, it has been clarihed that the said companies have complied with the applicable provisions of FEMA and RBI guidelines. Further, upon the scheme being effective requisite compliances shall be further made while issuing the shares pursuant to the scheme to such foreign shareholders. At this stage, it is worth noting that the Reserve Bank of India vide its letter dated 25ht February 2020, indicated that it shall not provide clearance to any scheme on individual basis but the onus for all compliances is on the petitioner company.
• (vi) Para (h) of the affidavit of the Regional Director refers to Clause ls of the Scheme which deals with t].e Accounting Treatment. The Petitioner companies have specified in the scheme, that the treatment shall be in compliance with the applicable Accounting Standards viz. IND AS 103. In this regard, it has been submitted that the upon scheme being effective, the accounting treatment

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shall be in compliance with the Applicable Accounting Standards prescribed under Section 133 of the Companies Act, 2O13. It is also clarifred that the Statutory auditors of the petitioner Transferee company has already confirmed the same vide his certificate dated 17th October 2O19 which is already placed on record as Annexure G to the said petition.

• 1. The other regulatory authority viz. Official Liquidator has made a representation dated 3.d June 2Q2O for the Transferor Company. It has been observed that the Transferor Company has conducted its business in accordance with Objects Clause and the same has not been conducted in any manner prejudicial to tlle interest of its members or public interest, hence the petitioner transferor company may be dissolved witiout following the process of winding up. F\rrther, the Official Liquidator has sought directions to be issued to preserve the books of accounts, papers and records of the Transferor Company and not to dispose of the same without prior permission of t}le Central Govt. as per the provisions of Section 239 of the Companies Act, 2013. No adverse observations are made in the said report.
• 1. No representation has been received from the Income Tax Authorities. Hence, it is assumed that the said authorities have no objection to the proposed Scheme. However, it is submitted that on the basis of the records of the Petitioner Companies as on 3l"t March 2OZO, there is no undisputed outstanding demand for income tax for either of the petitioner companies. There is a disputed outstanding demand for the Transferee Company for the Assessment year 2018-19. The appeal tiled in this regard is pending before Commissioner of Income Tax (Appeals). It is hereby confrrmed that as and when the said demand is crystallized, the Petitioner Transferee Company will be liable for making payments for the same. It is further confirmed, that the said Transferee Company shall be liable for any demand already created or become payable due to any of the proceedings related to Income Tax department in future for outstanding demand prior to amalgamation in respect of the Transferor Company. The Transferee Company undertakes to abide by all the applicable provisions of the Income Tax Act.

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C.P. (CAAI No. 17INCLT/AIIMI2O2O IN c.A. f cAAl No. la/NcLT/AHNU2ozo

• 1. In compliance with the proviso to sub-section (7) of Section 230, the Statutory Auditor of t}re Transferee Company dated 17fr October 2019, conhrming that the accounting treatment envisaged under the said scheme of Arrangement in the books of the Transferee Company is in compliance wit]. the applicable Accounting Standards notilied by Central Govt. in section 133 ofthe Companies Act, 2013.
• 1. Considering the entire facts and circumstances of tie case and on perusal of the Scheme and the documents produced on record, it appears that all the requirements of section 230 and 232 of the Companies Act, 2013 are satished and the same is not against interest of the shareholders and creditors as well as in the public interest.
• 1. As a result, the petition being CP (CAA) No. 17 of 2020 is hereby allowed. The Scheme which is at Annexure- F'to the petition is hereby sanctioned and it is declared that the same shall be binding on the petitioner companies, their shareholders, secured creditors and unsecured creditors and a-ll concerned under the scheme.
• 1. The amount to be paid to the Ofhce of the Regional Director towards legal costs and expenses is quantified at Rs. 50,000/-. The amount to be p{aid to the office of the Official Liquidator is quantihed at Rs. 25,OOO l- The said fees shall be paid by Ashima Limited, the Petitioner Transferee Company.
• 1. The sanction of the scheme shall not come in the way of any Competent Authority(s), Central Govt., State Govt. and/or l,ocal bodies to take any action as per the provisions of law for the time being in force, for the default or as the case maybe.
• 1. Filing and issuance of drawn up order is hereby dispensed with. AU concerned authorities to act on a copy of this order along with the scheme duly authenticated by the Registrar of this Tribunal. The Registrar of this Tribunal shall issue the authenticated copy of this order alongwith Scheme immediately.
• 1. The Petitioner Companies are further directed to lodge a copy of this order, the schedule of immovable assets of the Transferor Company as on the date of this order and the Scheme duly authenticated by the

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Registrar of this Tribunal, with the concerned Superintendent of Starnps, for the purpose of adjudication of stamp duty, if any, on th€ same within 60 days from the date of the order.

• 1. The Petitioner Companies are directed to file a copy of this order along with a copy of the scheme with the concerned Registrar of Companies, electronically, along with INC-28 in addition to physical copy as per relevant provisions of the Act.
• 1. CP (CAA) No. 17 of 2020 is disposed off accordingly.

du/4, MAI{ORAIVIA KUMARI AdJudlcatIEg Authorlty Member (Judictal,

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