ASHIMA LIMITED Vs. A

JUDGEMENT

(1.) This is a petition filed by Ashima Limited, for the purpose of obtaining the sanction of this court to a Scheme of arrangement for reconstruction and compromise between Ashima Limited and its Equity Shareholders, Preference Shareholders and Secured Creditors, proposed under section 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013.

(2.) It has been submitted that the petitioner is a listed public limited company and is the flagship company of Ashima Group. It is engaged in the business of manufacturing cotton fabrics. The Company's equity shares are listed on BSE Limited and the National Stock Exchange of India Limited. A brief background for the need to enter into the Scheme of Compromise has been provided by the Petitioner Company. The Company ventured into cotton textiles manufacturing during the year 1992. Later on, it started manufacturing of Denim products from the year 1994 -95 and Yard -dyed shirting products from the year 1996 -97. In the year 1998 -99, the company decided to expand its manufacturing facilities and for the purpose raised significant amount of funds through various debt instruments/borrowings. The Company was doing well till the year 1999 -2000, however it started facing financial problems from the year 2000 -01 when it reported first -ever loss. The Company was confronted with falling prices and increasing manufacturing costs, intensified price competition and a steep fall in company's realization. There were many other macro -economic factors that went against it during this period and continued to hamper the operations thereafter. The Company could not come out of these problems thereafter and hence could not make payment of interest and repayment of principal amounts to various lenders from the year 2001 -02.

(3.) It is further submitted that since the year 2001 till date, the company made extensive efforts to resolve the financial problems, like a CDR proposal and later a Scheme of Compromise and Arrangement in the year 2004. However, the restructuring process could not move forward for several reasons. The company put very sincere efforts to get the resolution of the problem and worked very closely with its Secured Creditors since 2006 and submitted a number of alternative debt settlement proposals in order to reach a solution. However, a debt restructuring stretched over a longer period of time was not found to be sustainable and hence a One -Time -Settlement of the debt was the only feasible option.