NCLT Sanctions Demerger of K.M. Sugar Mills' Distillery Division into KM Spirits and Allied Industries
The National Company Law Tribunal (NCLT) has sanctioned the Scheme of Arrangement for the demerger of the Distillery Division of K.M. Sugar Mills Limited into KM Spirits and Allied Industries Limited. This decision, pronounced by the NCLT, formalizes the separation of the Demerged Undertaking from the Demerged Company and transfers its assets and liabilities to the Resulting Company.The sanctioned scheme, filed under Sections 230 to 232 of the Companies Act, 2013, dictates that the Demerged Undertaking, which pertains to the Distillery Division of K.M. Sugar Mills Limited, will be transferred to KM Spirits and Allied Industries Limited. The Scheme specifies that the transfer and vesting of this undertaking are effective as of the Appointed Date, which is April 1, 2026.
The approval ensures that all legal, regulatory, and other proceedings relating to the Demerged Undertaking, including those pending before any statutory or quasi-judicial authority, will continue to be prosecuted and enforced by the Resulting Company.
Key Terms of the Scheme of Arrangement
The sanctioned scheme outlines the transfer of all aspects of the Demerged Undertaking to the Resulting Company. This includes the comprehensive transfer of assets and liabilities, making the operation continuous.| Aspect | Details |
|---|---|
| Transferred Asset | Distillery Division/Demerged Undertaking of K.M. Sugar Mills Limited. |
| Recipient Company | KM Spirits and Allied Industries Limited (Resulting Company). |
| Effective Date | April 1, 2026. |
| Financial Transfer | All debts, liabilities, contingent liabilities, duties, loans, and obligations of the Demerged Undertaking transfer to the Resulting Company. |
| Regulatory Compliance | The Scheme mandates that the Resulting Company must comply with Section 72A(4) of the Income Tax Act, 1961, and is subject to verification by the Assessing Officer during regular assessment. |
Tax and Statutory Compliance
The demerger process was subject to scrutiny and review by statutory authorities, including the Registrar of Companies and the Jurisdictional Income Tax Department.The Tribunal noted that the Petitioner Companies had duly addressed the observations and reports of the statutory authorities. The Income Tax Department submitted a report confirming that, based on available records, there were no pending assessment or reassessment proceedings against either company, and no adverse information regarding the proposed Scheme.
The Tribunal noted that the Petitioner Companies provided undertakings confirming that the interests of the Income Tax Department shall not be prejudiced. Furthermore, the Tribunal specified that the Resulting Company shall assume all tax liabilities, statutory dues, and obligations related to the Demerged Undertaking for the period prior to the Appointed Date, as per the provisions of the Scheme.
The Scheme of Arrangement has now been approved and sanctioned by the NCLT, making it binding on all shareholders and creditors of both K.M. Sugar Mills Limited and KM Spirits and Allied Industries Limited. The companies are required to proceed with the sanctioned Scheme of Arrangement in accordance with the terms and conditions of the order.
KMSUGAR Stock Price Movement
K.M.Sugar Mills Limited shares slipped by 4.39% on Friday, settling at ₹33.55 after shedding ₹1.55 from the previous close. The stock experienced a loss of this magnitude amidst trading activity totaling 1.44 million shares.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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