MICRO INKS LIMITED Vs. STATE

JUDGEMENT

(1.) THIS is a petition filed under Sections 78, 80, 100 to 103 of the Companies Act, 1956 seeking confirmation to the Scheme of Capital Reduction of the Company.

(2.) IT has been contended that the petitioner Company herein is a listed public limited Company engaged in the business of production and marketing of Printing Inks and its Intermediates namely pigments, resins, adhesives, enamels etc. It is one of the largest companies of the country and has established its presence in more than 70 countries and is one of the top 14 of the world. However, as pointed out in greater detail in the petition, the Company has made total investments of RS. 3918. 52 Million in Subsidiary companies situated in Austria, USA and Singapore.

(3.) IT has been submitted that these subsidiary Companies have made substantial losses during last few years. In view of the significant accumulated losses in the above companies and in absence of certainty of recovery of such losses in visible time, the management of the Company has realized that the aforesaid losses have eroded value of investments of the Company. It has been thought appropriate to write off the investments of two subsidiary Companies based on the valuation made by an independent firm of Chartered Accountants. The petitioner Company has substantial balance in its share premium account and Capital Redemption Reserve Account. The Company has proposed to use to the said balances in order to adjust the aforesaid reduction in the value of its investments.