Tribunal Permits Ricoh India to Get Capital Infusion of Rs 1,123 Crore
Ricoh India gets a new lease of life, NCLT permits recapitalisation.
The National Company Law Tribunal (NCLT) has permitted Ricoh company to recapitalise its Indian subsidiary, Ricoh India, by Rs 1,123 crore.
The NCLT order, released today and a copy of which is with BloombergQuint, says that infusion of funds is essential for Ricoh India to “carry its functions so that the economic implications of this fraud will not spill over to the functioning of the company and other stake holders.”
The NCLT has also appointed retired Bombay High Court judge V C Daga as a monitoring authority to oversee the functioning of Ricoh India, especially the utilisation of the recapitalisation funds, for a period of one year starting September 1, 2016.
Japan’s Ricoh Company holds a 73.6 percent stake in Ricoh India. It will cancel all its shares and purchase new shares at a premium, thereby recapitalising the company to the extent of losses detected owing to fraud. That amount has currently been estimated by Ricoh India to be Rs 1,123 crore. Ricoh Company will bring the amount before cancellation as share application money & then cancel the shares.
The NCLT order says that for cancellation of shares and issuing fresh shares, Ricoh India “will hold Extra Ordinary General Meeting under the monition and approval of monitoring authority.”
The order recommends that the monitoring authority, Justice Daga, take the assistance of an auditor in monitoring the affairs of the company.
The NCLT has clarified that its order will have no bearing on the investigations pertaining to the fraud at Ricoh India.
This Bench explicitly makes it clear that this order has not been passed either to give protection to Ricoh company or to any other person indulged in the fraud.NCLT Mumbai Bench Order
At a hearing on August 17, 2016 NCLT had, in an interim order, refused Ricoh Company’s capital infusion request. NCLT had asked Ricoh company to submit the statutory audit report files by BSR & Co. and the forensic audit report conducted by PwC on or before August 22.
BloombergQuint interviewed a few Ricoh India minority shareholders on the telephone and they welcomed the NCLT decision.
Its a very huge positive. NCLT which has just been set-up was very quick in decision making. The capital infusion will boost the cash balance. Possibly the worst is over for the minority shareholders now.Manthan Sanghvi, minority shareholder of Ricoh India
All the vices in one go have been wiped out. If there would be no money there would be no business. Now the company is flush with funds and moreover the balance sheet of the company will be immaculately clean.R K Agrawal, minority shareholder of Ricoh India
Over the last ten months Ricoh India has been in the eye of a storm that involves, delayed reporting of financials, auditor red flags regarding accounting irregularities, a forensic audit, the suspension of its CEO, CFO and COO, a police complaint by Ricoh India against its own officials, shareholders’ effort to unseat four directors and a petition by the Japanese parent – Ricoh Company, requesting share cancellation and recapitalization of the Indian subsidiary.
Today’s decision by the NCLT will be followed by more hearings on the matter of oppression and mismanagement, as claimed in the petition filed by Ricoh Company. The next hearing is scheduled for November 7, 2016.