Rajeswara Rao Vittanala, Member - (1.) The Company Application bearing CA(CAA) No. 25/230/HDB/2017 (referred to as Company application hereinafter) is filed by M/s. SPI Cinemas Private Limited, under Sections 230 and other applicable provisions of the Companies Act, 2013 by seeking the following reliefs: a) To dispense with the meeting of the Equity Shareholders and Secured Creditors. b) To convene the meeting of the Unsecured Creditors of the Applicant Company at the registered office of the Company or any other place as may be directed for consideration of the proposed scheme. c) To appoint a Chairperson for convening the conducting the meeting of the Unsecured Creditors: i. That the quorum be fixed as 15 (fifteen) Creditors personally present in the meeting. ii. The Creditors be permitted to exercise their vote at the said meeting either in person or through proxies. iii. As to the manner of giving the notices of the said meeting, it is sufficient to serve the notices on the Unsecured/Trade Creditors of the Applicant Company by Ordinary Post. iv. That the advertisement be directed to be published once in English Edition of "The Indian Express", Nellore Edition and once in Telugu Edition of "Andhra Jyothi", Nellore Edition. v. As for the time for the Chairperson of the meeting to file their report to the Hon'ble Tribunal of the result of the meeting, the time be fixed as 10 days from the date of the said meeting.
(2.) Brief contentions as raised in the Company application is as under: a) M/s. SPI Cinemas Private Limited (Applicant Company) was incorporated as a Private Limited Company under the Companies Act, 1956 in the State of Andhra Pradesh on 30.09.1991 under the name of M/s. Chayalakshmi Creations Private Limited. Subsequently, the name was changed to M/s. SPI Cinemas Private Limited on 18.03.2009. The Registered Office of the Applicant Company is situated at II Floor, 3rd Cross, Central Avenue, Magunta Layout, Nellore - 524003, Andhra Pradesh. b) The main objects and nature of business of the Transferee Company, in brief, as set out in the Memorandum of Association, are as follows:- (i) To produce, distribute and exhibit motion pictures of all kinds. In any languages Indian and foreign including feature films, commercials, advertisements, commercial ads jingly and sports documentaries. Educational pictures and audio visual pictures, and slides in all branches and fields through all professes that may be discovered or offered from time to time resulting in Cinematographic films, television films, cartoon films, silent or talking, sound producing, synchronized, stereophonic, colored and bioscope film and computer animation and related productions. (ii) To carry on the business of cine developer and printer, reduction and blow-up services of all varieties of films and undertake all cine laboratory services including motion picture editing, titling, recording and dubbing, sound processing, printing and duplicating in all sizes, including digital techniques. (iii) To educate, train employ, bring up, enter into agreement with films directors, technicians, engineers, sound experts, cameraman, musicians, art directors, actors, actresses and other persons for the purpose of production, exhibition, display of films, dramatic or performances of all kinds or otherwise. (iv) To carry on as owners and/or lessees of film theatres/multiplexes/studios with recreation centers, amusements parks, shopping arcades, video game centres, bowling alleys, recording theatres, preview theatres including providing facilities in all its branches of entertainment and to create and develop infrastructure facilities, erecting and running of theatres/multiplexes/studios for exhibiting films and for musical performance and to give such studios or theatres either on lease or on rent, either alone or in partnership with individuals and/or bodies. (v) To engage in the field of education in all of its forms and types and also undertake social welfare measures, environment protection initiatives, develop concept of healthy living in society in general and promote and implement the same for betterment of living of all sections of the society and for this purpose set up institutions, centres and the like etc. c) At present the applicant Company is engaged in the business of production, distribution and exhibition of film and movies etc. d) The authorized, issued, subscribed and paid-up share capital of the Applicant Company as on 31.03.2016 is as under: Subsequent to the 31.03.2016 there has been no change in the capital structure of the Applicant Company.
(3.) It is stated that as part of internal reorganization and restructuring of the share capital structure of the Applicant Company and with a view to return funds which are in excess of wants of the Company, the Scheme of Arrangement will benefit the Applicant Company and their shareholders. The rationale and reasons for the proposed Scheme of Arrangement, inter alia, are summarized below:- i. Reduce and cancel 3,82,100 equity shares of Rs. 100/- each (cancelled shares) at a face value of Rs. 100/- per share (Face Value Amount). ii. Revise the face value of balance 3,10,670 equity shares from Rs. 100/- each to Rs. 10/- each and credit the balance Rs. 90/- per equity shares to the Securities Premium account. iii. Of the total Reduced Shares, 3,44,000 equity shares of Rs. 100/- each comprise the entire investment of M/s. Samayanallur Power Investments Private Limited ("SPIPL") and the balance 38,100 equity shares of Rs. 100/- each comprise a portion of investment of Mr. S.V. Swaroop Reddy which cumulatively represent 55.16% of the paid-up share capital of the Company. This could facilitate and provide SPIPL and Mr. Swaroop Reddy liquidity for their investments and also return funds which are in excess of wants of the Company. iv. Further, the Capital Reduction is not only expected to provide SPIRL and exit option and liquidity of Mr. S.V. Awaroop Reddy, but also expected to benefit the continuing shareholders by: a) Reducing the outstanding number of shares and consequently increase Earnings Per Share over a period of time and enhance long term value creation; b) Making the Balance Sheet leaner and more impressive by improvement of key ratios like Return on Net Worth, Return on Assets etc. c) The revision of face value of the Balance Shares as defined in the Scheme would also benefit the Company and its continuing shareholders by improving the Return on Equity and also benefit the Company in terms of any future plans to attract fresh investment or undertake an Initial Public Offer through the stock exchanges. In view of the above benefits, the proposed arrangement would result in an enhanced shareholder value.;