The National Company Law Tribunal (NCLT), Mumbai Bench, has sanctioned the Scheme of Amalgamation between Asian Paints Limited (Transferee Company) and its wholly-owned subsidiary, Asian Paints (Polymers) Private Limited (Transferor Company). The Appointed Date for the scheme is set as 1st April 2025. This vertical merger is designed to maximize shareholder value, simplify the group structure, and achieve significant operational synergies in procurement and supply chain management.
NCLT Sanctions Amalgamation Scheme
Asian Paints Limited (the “Company”) confirms that the Hon’ble National Company Law Tribunal (NCLT), Mumbai Bench, issued its Order on 10th March 2026, sanctioning the proposed Scheme of Amalgamation. This scheme involves the merger by absorption of Asian Paints (Polymers) Private Limited (the “Transferor Company”) into Asian Paints Limited (the “Transferee Company”).
Key Dates and Structure
The Scheme has a defined timeline:
- Appointed Date: 1st April 2025. The scheme will be effective retrospectively from this date.
- Effective Date: The date on which the certified copy of the NCLT Order is filed with the Registrar of Companies, Mumbai.
The merger is a vertical consolidation, as the Transferor Company is a wholly-owned subsidiary. Upon completion, the Transferor Company will be dissolved without winding up.
Rationale and Strategic Benefits
Management believes the amalgamation will yield several core benefits:
- Operational Strengthening: Leveraging resources to drive scale benefits across operational and financial areas.
- Efficiency Gains: Reduction in regulatory compliance multiplicity, leading to economies in administrative costs and simplification of the group structure.
- Talent Pooling: Enhancing organizational capabilities through the pooling of diverse talent and human capital.
- Shareholder Value: The amalgamation is expected to maximize shareholder value of the Transferee Company.
Capital Structure Post-Merger
Since the Transferor Company is a wholly-owned subsidiary, no new shares will be issued by the Transferee Company upon becoming effective. The stated capital of the Transferor Company shall stand cancelled, and no consideration will be discharged.
Share Capital Adjustment
The Scheme involves a key technical adjustment to the Transferee Company’s authorized capital:
- The authorized share capital of the Transferee Company will automatically increase by the aggregate authorized share capital of the Transferor Company (₹13,00,00,00,000).
- The Transferor Company’s equity shares (Face Value ₹10 each) will be reclassified/reorganized as 10 equity shares of Re. 1 each in the Transferee Company.
It is noted that the stamp duties and fees paid on the Transferor Company’s authorized capital will be utilized for the increased authorized capital of the Transferee Company, avoiding further duty payments on this expansion.
Accounting and Tax Implications
Accounting Treatment
Both entities, being under common control, will account for the merger using the “Pooling of Interest Method” as prescribed by Appendix C of Ind AS 103.
Tax Treatment
The Scheme is structured to comply with the definition of “Amalgamation” under the Income Tax Act. All accumulated losses, unabsorbed depreciation, and tax credits of the Transferor Company are permitted to be transferred and utilized by the Transferee Company, subject to statutory provisions like Section 72A of the IT Act.
Compliance and Final Orders
The NCLT noted that all requisite statutory compliances have been fulfilled, and the Scheme is deemed unopposed by statutory authorities, including the Regional Director and the Official Liquidator.
The Petitioners have undertaken to comply with all directions, including filing the certified copy of the Order with the Registrar of Companies within 30 days of receiving the Order. The Petition stands disposed of.
Source: BSE
