NCLT Hyderabad Approves Kalburgi Cement’s ₹213.41 Crore Merger Deficit Set-Off Against Securities Premium
Sangeetha Prathap
The National Company Law Tribunal (NCLT), Hyderabad Bench, has approved Kalburgi Cement Private Limited’s proposal to adjust an amalgamation adjustment deficit of ₹213.41 crore against its securities premium account, holding that such a move falls within the company’s internal financial domain so long as statutory safeguards are complied with and creditor interests remain protected.
The order was passed by a coram comprising Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri, while allowing a petition filed under the Companies Act seeking confirmation of the proposed accounting adjustment without any reduction in the company’s paid-up share capital.
Kalburgi Cement approached the tribunal after its shareholders unanimously approved the proposal at an extraordinary general meeting held in May 2025. The company submitted that its audited financial statements as on December 31, 2024 reflected a significant deficit arising out of earlier merger and amalgamation transactions. According to the company, writing off this deficit against the securities premium account was necessary to ensure that its balance sheet presented a true and fair view of its financial position.
During the proceedings, the tribunal examined whether the proposed adjustment complied with statutory requirements and whether it prejudiced the interests of creditors or other stakeholders. Notices had been duly issued to the Regional Director, Registrar of Companies and other statutory authorities. The Regional Director and the Registrar raised certain factual observations, which were addressed by the company through affidavits and additional clarifications placed on record.
Importantly, the tribunal noted that no unsecured creditor had raised any objection to the proposed adjustment. It was also recorded that BNP Paribas, which held a charge over the company’s assets, had not opposed the proposal, indicating that creditor interests were not adversely affected.
Relying on settled principles of company law, the tribunal reiterated that courts and tribunals should ordinarily refrain from interfering with corporate decisions relating to capital reduction or internal financial restructuring, unless the proposal is unfair, inequitable, or contrary to law. In this context, the bench referred to the decision in Reckitt Benckiser (India) Limited (2005), which held that reduction of share capital is essentially a domestic concern of the company, and judicial approval should follow where the proposal is backed by shareholder consent and does not prejudice creditors.
After examining the material on record, the NCLT concluded that the proposed adjustment met the requisite legal standards. The bench observed that the cancellation of the amalgamation adjustment deficit “appears to be fair and reasonable and is not contrary to public policy and does not violate any of the provisions of law.” Accordingly, the tribunal allowed the petition and approved Kalburgi Cement’s proposal to set off the ₹213.41 crore merger-related deficit against its securities premium account. The company was directed to file a certified copy of the order with the Registrar of Companies and to publish the prescribed statutory notices within the timelines stipulated under law.
Appearance
For the Applicant: Advocate Susri Mulukalapelly
For Respondents: Ravi Metta, Deputy RoC Office, Gokulnath, Dy. Director, RD Office; Advocates Rakshita,B.Sapna Reddy for IT dept
Cause Title: Kalburgi Cement Private Limited v. RoC and RD of Telangana
Case No: Company Petition IB/24/66/HDB/2025
Coram: Judicial Member Rajeev Bhardwaj , Technical Member Sanjay Puri
