RAASI CEMENT LIMITED Vs. STATE

JUDGEMENT

(1.) This is an application under Section 391 read with Section 394 of the Indian Companies Act, 1956 for approving the scheme of arrangement through which the cement division of the petitioner company namely M/s. Raasi Cement Limited (for short, 'RCL') is proposed to be transferred and merged with M/s. India Cements Limited (for short, 'ICL') which is holding along with its subsidiaries and associates more than ninety per cent of the share capital of RCL as also for reduction of the share capital.

(2.) The authorised capital of RCL is 25,000 11 per cent cumulative redeemable preference shares of Rs.100/- each and 1,80,00,000 equity shares of Rs.10/- each, that is to say total Rs.1825 lakhs. The issued, subscribed and paid up capital is 1,65,42,774 equity shares of Rs.10/- each less call in arrears of Rs.0.05 lakhs, that is total Rs.1654.23 lakhs.

(3.) RCL has been incorporated on 15-4-1978. The object of RCL has been more particularly set up in its memorandum of association. The main object of RCL is to produce, manufacture, refine, prepare, import, export, purchase, sell and generally to deal in all kinds of Portland cement (Portland Pozzolana cement, Portland slag cement, portland rapid hardening cement) etc., etc., to carry on trades and business of the survey, prospecting and proving of cement grade lime stone deposits, asbestos and of manufacturers of cement and building materials etc. RCL is also engaged in the business of manufacture and sale of ceramic and paper products. ICL together with its subsidiaries and associates holds more than 90 per cent share capital in RCL. The capacity of RCL to produce cement is of about 1.60 million tonnes per year and the cement produced is marketed under the brand name of Raasi in the southern States. ICL has cement plants onerating in the State of year for the manufacture of cement. ICL enjoys a market of 25 per cent in the southern part of the country. RCL and ICL have agreed that the Cement Division of RCL be transferred to and vested in ICL so that there would be synergy in marketing and distribution of cement resulting in optimisation of realisation. ICL shall pay to the other shareholders Rs.300/- per equity share in RCL while continuing to retain their stake in RCL. Annexure 'B' is the scheme of arrangement. With the approval of this arrangement, all assets of RCL excluding the assets of other divisions as specified in Schedule 'A' of the scheme of arrangement, relating to its cement division, as also of the liabilities shall stand transferred to and vested in ICL. The shareholders of RCL other than ICL shall be entitled to receive from ICL Rs.300/- per equity share held by them in RCL being the settlement price and they shall cease to have any interest in the said cement division. The other business of RCL shall continue to be vested in RCL. The Arrangement shall not in any manner affect or modify the service conditions of the employees of the cement division of RCL. All the employees of RCL engaged in and for the business of the Cement Division of RCL on the Effective Date shall become the employees of ICL without any break or interruption in service on the same terms and conditions on which they are engaged as on the effective date and their services shall not be treated as having been broken or interrupted for the purpose of provident fund or gratuity or superannuation or other statutory purposes and for all purposes will be reckoned from the date of their respective appointments in RCL.