In Re: Koyo Bearings India Private Limited

H. Billappa, J.—The petitioner-company has filed this petition praying for reduction of paid-up share capital as resolved by the special resolution dated 16.4.2015.

It is stated, the petitioner-company was incorporated on 23.6.2009 under the name and style of Koyo Bearings India Private Limited having its registered office situated at Ground Floor, E-1, Beech Manyata Embassy Business Park, Outer Ring Road, Bengaluru-560064. The petitioner-company is engaged in the manufacture and sale of automotive ball bearings. The petitioner is a wholly owned subsidiary of JTEKT Corporation, a Japanese Company.

It is stated, the authorized share capital of the petitioner-company is Rs. 426,80,00,000/- divided into 42,68,00,000 equity shares of Rs. 10/- each. The issued, subscribed and paid up share capital of the petitioner-company is Rs. 426,28,55,030/- divided into 42,62,85,503 equity shares of Rs. 10/- each fully paid up. Out of which 42,62,85,502 equity shares of Rs. 10/- each fully paid up are held by JTEKT Corporation, Japan and 1 equity share of Rs. 10/- fully paid up, is held by an individual as a nominee of JTEKT Corporation, Japan.

It is stated, at the Extraordinary General Meeting of the petitioner company held on 16.4.2015, it was resolved to reduce the issued, subscribed and paid up share capital of the company from Rs. 426,28,55,030/- divided into 42,62,85,503 equity shares of Rs. 10/- each to Rs. 108,85,92,880/- divided into 10,88,59,288 equity shares of Rs. 10/- each by recalling, canceling and extinguishing 31,74,26,215 equity shares of Rs. 10/- each out of the existing total subscribed, issued and paid up equity shares capital of the company and writing off Rs. 317,42,62,150/- from its paid up share capital, which has been lost and is not represented by the available assets of the company and adjusting the same against the debit balance of profit and loss accounts as on 31.3.2015. It is also resolved that the security premium account of the company of Rs. 45,01,44,970/- as on 31.3.2015 be written off which has been lost and is not represented by the available assets of the company and adjusted against the debit balance of profit and loss account as on 31.3.2015.

The summary of total loss to be set-off is as follows:

It is stated, the reduction in the capital of petitioner-company is proposed to be achieved through the reduction of share capital against writing off accumulated loss. The proposed financial restructuring entails the reduction of share capital of the company in terms of the number of shares and not in terms of face value per share. There will be no change in the share holders of the company contemplated in the proposed financial restructuring and the share holders post financial restructuring shall continue to remain the same as that of pre financial restructuring. The proposed set off of accumulated loss against the paid-up share capital and the write off of the amount in the securities premium account of the company are only book entries and have no financial outlay/outgo whatsoever to the share holders of the petitioner company.

It is stated, in order to improve the financial position and to represent a true and fair state of affairs in the current business environment, it has become imperative for the petitioner company to wipe out its losses in the previous years and in the current year and restructure the company as mentioned above. The proposed reduction in share capital and write-off of the share premium account is in the best interest of the company.

It is stated, the petitioner had filed CA No. 395/2015 praying to dispense with the settling of the list of creditors. The said application was allowed on 26th June, 2015. The paper publication was taken in ''The Hindu'' English Daily and ''Kannada Prabha'' Kannada Daily newspapers on 10.7.2015. Nobody has appeared before the Court opposing the petition.

It is stated, the proposed set off of the accumulated losses against the paid up share capital and the write off of the amount in the securities premium account of the company are only book entries and have no financial outlay/outgo whatsoever to the shareholders of the company. The proposed reduction of the share capital will not in any way adversely affect the operation of the petitioner-company.

In the circumstances, having regard to the petition averments and the resolution passed at the Extraordinary General Meeting held on 16.4.2015, the prayer can be granted.

Accordingly, the following order is passed;

"ORDER

(i) The petition is allowed;

(ii) The reduction of share capital as resolved at the Extraordinary General Meeting held on 16.4.2015 which reads as under is confirmed:

"RESOLVED THAT in continuation to the resolution passed in the Extra Ordinary General Meeting of the Shareholders of the Company held on 31.03.2015 and pursuant to the provisions of Section 100 of the Companies Act, 1956 read with Section 52 of the Companies Act, 2013, the Articles of Association of the Company and other applicable provisions, if any, and subject to confirmation of the Hon''ble High Court of Karnataka at Bangalore and any other approval as may be required, the total loss of the Company being Rs. 362,44,07,120/- ( Rs. Three Hundred Sixty Two Crores Forty Four Lacs Seven Thousand One Hundred and Twenty) (rounded off) as at 31.03.2015 will be reduced as set out in the following resolutions;

FURTHER RESOLVED THAT pursuant to Section 52 of Companies Act, 2013 read with Section 100 of the Companies Act, 1956 and other applicable provisions if any, Articles of Association of the Company and subject to confirmation of the Hon''ble High Court of Karnataka at Bangalore and any other approval as may be required, the securities premium account of the company of Rs. 45,01,44,970/- ( Rs. Forty Five Crores One Lac Forty Four Thousand Nine Hundred and Seventy) as at 31.03.2015 be written off which has been lost and is not represented by available assets of the Company, and adjusted against the debit balance of Profit and Loss Account as at 31.03.2015;

FURTHER RESOLVED THAT pursuant to the provisions of Section 100 of the Companies Act, 1956 and other applicable provisions if any, Articles of Association of the Company and subject to confirmation of the Hon''ble High Court of Karnataka at Bangalore and any other approval as may be required, the issued, subscribed and paid up share capital of the Company be reduced from Rs. 426,28,55,030/- ( Rs. Four Hundred Twenty Six Crores Twenty Eight Lacs Fifty Five Thousand and Thirty) divided into 42,62,85,503 (Forty Two Crores Sixty Two Lacs Eighty Five Thousand five hundred and Three) equity shares of Rs. 10/- ( Rs. Ten only) each to Rs. 108,85,92,880/- ( Rs. One Hundred and Eight Crores Eighty Five Lacs Ninety Two Thousand Eight Hundred and Eighty) divided into 10,88,59,288 (Ten Crores Eighty Eight Lacs Fifty Nine Thousand Two Hundred and Eighty Eight Only) equity shares of Rs. 10/- ( Rs. Ten Only) each by recalling, canceling extinguishing 31,74,26,215 (Thirty One Crores Seventy Four Lacs Twenty Six Thousand Two Hundred and Fifteen) equity shares of Rs. 10/- ( Rs. Ten Only) each, fractions being ignored, out of the existing total subscribed issued and paid up equity shares capital of the Company and writing off Rs. 317,42,62,150/- ( Rs. Three Hundred Seventeen Crores Forty Two Lacs Sixty Two Thousand One Hundred and Fifty) from its paid-up share capital, which has been lost and is not represented by the available assets of the Company, and adjusting the same against the debit balance of Profit and Loss Accounts as at 31.03.2015;

FURTHER RESOLVED THAT, an application for amendment of Company petition No. 84/2015 filed on 13.04.2015 before the Hon''ble High Court of Karnataka at Bengaluru be submitted and if allowed an amended petition be filed before the Hon''ble High Court of Karnataka at Bangalore under section 101 and other applicable provisions, if any, of the Companies Act 1956/Companies Act 2013, seeking the confirmation of the reduction of capital and writing off the securities premium account as proposed; and

FURTHER RESOLVED THAT the Board of Directors of the Company be and is hereby authorised to do or cause to be done all such acts, deeds, matters and things as may be necessary, proper or expedient, to give effect to this resolution including to appoint advocates, file, amend and verify the petition, affirm affidavits, appear in the High Court and do all acts, deeds, matters and things, connected with or incidental to giving effect to this resolution and make such filings with the Registrar of Companies and such other regulatory authorities as may be required for this purpose."

(iii) The minutes set out in the schedule hereunder is approved:

SCHEDULE

"The securities premium account of the Company of Rs. 45,01,44,970/- ( Rs. Forty Five Crores One Lac Forty Four Thousand Nine Hundred and Seventy) as at 31.03.2015 be written off which has been lost and is not represented by available assets of the Company, and adjusted against the debit balance of Profit and Loss Account as at 31.03.2015;

The issued, subscribed and paid up share capital of the Company be reduced from Rs. 426,28,55,030 ( Rs. Four Hundred Twenty Six Crores Twenty Eight Lacs Fifty Five Thousand and Thirty) divided into 42,62,85,503 (Forty Two Crores Sixty Two Lacs Eighty Five Thousand Five Hundred and Three) equity shares of Rs. 10/- ( Rs. Ten only) each to Rs. 108,85,92,880/- ( Rs. One Hundred and Eight Crores Eighty Five Lacs Ninety Two Thousand Eight Hundred and Eighty) divided into 10,88,59,288 (Ten Crores Eighty Eight Lacs Fifty Nine Thousand Two Hundred and Eighty Eight only) equity shares of Rs. 10/- ( Rs. Ten only) each by recalling, canceling and extinguishing 31,74,26,215 (Thirty One Crores Seventy Four Lacs Twenty Six Thousand Two Hundred and Fifteen) equity shares of Rs. 10/- ( Rs. Ten only) each, fractions being ignored, out of the existing total subscribed issued and paid up equity shares capital of the Company and writing off Rs. 317,42,62,150/- ( Rs. Three Hundred Seventeen Crores Forty Two lacs Sixty Two Thousand One Hundred and Fifty) from its paid-up share capital, which has been lost and is not represented by the available assets of the Company, and adjusting the same against the debit balance of Profit and Loss Accounts as at 31.03.2015."

(iv) Certified copy of the order including the minutes as approved shall be delivered by the petitioner-company to the Registrar of Companies within 21 days from the date of receipt of a copy of this order.

(v) The notice of reduction of share capital and schedule minutes as approved shall be published in ''The Hindu'' English daily and ''Kannada Prabha'' Kannada daily newspapers within 14 days from the date of registration of the order. The minutes of the Registrar of Companies and a copy of the paper publication shall be filed in this petition with the registry."