- (1.) The Counsel for the Applicant Company submits that the proposed Scheme is Scheme of Arrangement between Adonis Electronics Private Limited and its Shareholders & Creditors for realignment and restructuring of 0% fully convertible unsecured debentures by conversion into Equity Shares and subsequent reduction and conversion specified unsecured creditors into Preference Share.
(2.) The Counsel for the Applicant Company further submits that the Applicant Company is carrying on business of installation of air conditioners and LED at customers locations and provides after sales and services of all electronics products including warranty services and it has also entered into long term after sales and service contracts on Pan India basis with Mire Electronics Limited of all its products.
(3.) The circumstances that have necessitated or justified the Scheme of Arrangement are inter alia summarised as under: a) There are contractual obligations towards consumers and buyers of electronic items of its customers for agreed period, it cannot afford to scale down its operations and support set up. b) Due to continuous losses, the Company was not able to raise finance required for expansion of business from banks and financial institutions in such circumstances it raised substantial funds as advance from its main customer i.e. Mire Electronics Limited and also by way of quasi equity by issue of 12,15,523 0% Fully Compulsory Convertible Unsecured Debentures of Rs. 100/- each to the investors. c) Specified Unsecured Creditors has given advances of Rs. 26.50 crores as on 30th November 2016 over a period of time to the Company to ensure assured and efficient after sales services to its customers from the Company. However, with decrease in Specified Unsecured Creditors volume the service operation has become unviable and has lead to ballooning of advances. d) As of March, 2016 the Company has accumulated losses of Rs. 46.28 crores. There is possibility of turnaround in the operation in the current financial year of the Company, however accumulated losses and liabilities needs to be addressed to have sustained profitable operation hence forth. e) To put the Company firmly on growth trajectory, the Board of Directors has approved following steps to realign and restructure its liabilities which would lead to increase in its net worth and in the process, increase its capability to raise finance it has already written back outstanding of various creditors/employees which are no longer payable amounting to Rs. 12.11 crores and has been credited to Reserve & Surplus Account. The Company proposes conversion of 0% Fully Compulsory Convertible Unsecured Debentures amounting to Rs. 12.15 Crores into Equity Shares and simultaneously reduction of Equity Shares arising out of deemed conversion and conversion of advances from Specified Creditors of Rs. 26.50 crores into 0.01% Redeemable Preference Shares of Rs. 10/- each through this Scheme of arrangement. f) The above realignment and restructuring of liabilities of the Company will benefit all the stakeholders in long run and create strong foundation for sustainable growth without infusion of funds from present stakeholders.;