NARMADA CHEMATUR PETROCHEMICALS LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Company Petition No. 147 of 2006 is filed by the petitioner, Narmada Chematur Petrochemicals Limited [hereinafter referred to as 'Transferor Company'] for an appropriate order of sanctioning the Scheme of Arrangement in the nature of amalgamation with Gujarat Narmada Valley Fertilizers Company Limited [hereinafter referred to as 'Transferee Company'].

(2.) It has been submitted on behalf of the Transferor Company that the Transferor Company is a listed Public Limited Company and was promoted as a joint venture between GNFC, the Transferee Company, Chematur Engineering AB of Sweden and its Indian Associates, IBI Chematur [Engineering & Consultancy] for the manufacture of TDI and Aniline. It is further submitted that amongst others, one of the reasons for incorporating the Transferor Company, as a separate company was to facilitate the Technical Collaborator, i.e., Chematur Engineering AB Sweden to participate in the project through equity investment. The Technical Collaborator for NCPL having divested its holding in NCPL and Chematur Group Directors on the Board of NCPL having thereafter resigned it has ceased to be a Joint Venture Company. It is submitted that the Transferor Company is mainly engaged in the business of manufacturing and selling of chemicals and the turn-over of NCPL Transferor Company during the last financial year, i.e., 2004-2005 was Rs. 441.77 Crores and it has made net profit of Rs. 30.53 Crores. It has built up Reserves and Surplus of more than Rs. 109.28 Crores. GNFC, the Transferee company has an equity stake of 56.45% in the Transferor Company, i.e., NCPL and as such the Transferor Company NCPL is subsidiary company of Transferee Company. It has been further submitted that the present trend in corporate world is of consolidation, greater scale of operations, wider product base, global competitiveness leading to growth in top and bottom line. When GNFC the Transferee Company and NCPL, the Transferor Company are merged, the merged entity will be well poised to implement these concepts more effectively than the two company companies doing it separately. It is submitted that both the Transferor and Transferee Companies belong to same group of management and the Transferee Company is a holding company for the Transferor Company. It has been further submitted that the Board of Directors of both the companies have thought it appropriate to amalgamate them for the purpose of achieving synergic advantages. It is thought fit to combine all the operations under one company and the same would make administration easy and control systems more efficient. The amalgamated company would have a larger market presence. It would be in a position to maximize its profits through optimum utilization of its resources and minimize the administrative and operative costs. The increased capital in case of the amalgamated company will strengthen its capital adequacy. Thus, the amalgamation would be to the mutual advantage of both the Transferor and Transferee Companies. It is further submitted that the Transferee Company has the core competence in the marketing and selling of industrial chemicals. Since the Transferor Company NCPL is also engaged in manufacture and selling of industrial chemicals post merger synergies could be available and the merger will open up new avenues for product planning and product development as also effective marketing etc. It is further submitted that both the companies are located on the same campus and the complimentary strength of both the companies will enable the merged entity to visualize growth plans with a larger resources base and the marketing network of GNFC, the Transferee Company and its other strengths will now freely flow into the merged entity. The advantages of the merger of Transferor Company with Transferee Company are set out in Para 7.3. of the petition.

(3.) It is further submitted that Board of Directors of the Transferor Company resolved at the Board Meeting held on 28th February 2006, that subject to such approvals of shareholders, and subject to such sanctions of appropriate Courts, as may be required in law, and subject to such consents and permissions of the Central Government and other authorities as may be necessary the Scheme of Amalgamation/Arrangement be made between the Transferor Company and the Transferee Company on the broad basis referred to in the Scheme of Amalgamation. It is further submitted that the learned Single Judge of this Court by order dated 1st May 2006 passed in Company Application No. 224 of 2006 [Annexure 'D' to the petition] directed the Transferor Company to convene separate meetings of the equity shareholders, secured creditors and unsecured creditors of the company for the purpose of considering and if thought fit approving with or without modifications in the said Scheme of Amalgamation. It is further submitted that on 29th June 2006, the said meetings of the equity shareholders, unsecured creditors and secured creditors of the company were duly convened in accordance with the aforesaid order passed by this Court and the result of the meetings is also produced at Annexure 'E' to the petition.