VIKRANT TYRES LIMITED Vs. NIL

JUDGEMENT

(1.) THIS petition is filed by the petitioner for sanction of the scheme of arrangement and amalgamation between J. K. Industries Limited (hereinafter referred to as Transferee Company) and its share holders and J. K. Agri Genetics Limited (hereinafter referred to as jkal) and its shareholders and J. K. Sugar Limited (hereinafter referred to as JKSL) and its shareholders and Vikrant Tyres Limited, the petitioner herein, and its creditors and its shareholders.

(2.) THE petitioner is a public company limited by shares under the Companies Act of 1956, on October 3, 1973 having its registered office at Vikrant House, No. 54, First Main Road, V. V. Mohalla, Mysore, Karnataka. The main object of the petitioner is to manufacture, construct, produce, prepare, vulcanize, retread, repair, develop, improve, sell, export, import and generally deal in tyres and tubes of every description for all types of vehicles and other business as mentioned in the memorandum of association. The authorized share capital of the petitioner is Rs. 40 crores and Rs. 5,00,000. 00 14% redeemable cumulative preference shares of Rs. 100 each of the total value of Rs. 5,00,00,000/ -. The issue subscribed and paid up share capital is Rs. 25,63,44, 870- of 2,56,34,487 equity shares of Rs. 10-00 each fully paid up.

(3.) THE petitioner with its present capacity of 13. 8. lakh tyres per annum remains the smallest tyre company in the country. Therefore it would be difficult for the petitioner tc raise further resources to fund any further capacity expansion in view of its unfavourable debt equity ratio with the result the operations of the petitioner are becoming uncompetitive and unviable on a stand alone basis. The transferee company had acquired controlling interest in the petitioner company in 1997 by acquiring 52% of its capital. Thereafter, a major modernization scheme at substantial investment was implemented. Therefore, it was considered necessary for the petitioner to amalgamate with its holding company ie. , transferee company which is one of the largest and financially stronger tyre companies in the country in the best interest of the petitioner the transferee company and their respective shareholders.