Submission of Draft Scheme of Reducation of Share Capital under Regulation 37(5)(b) of SEBI (LODR) Regulations, 2015
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Svarnim Trade Udyog Ltd has submitted a draft scheme to reduce its paid-up equity share capital by 99%, from Rs. 2.43 crore (24,31,500 shares of Rs. 10 each) to Rs. 2.43 lakh (24,315 shares of Rs. 10 each). This means every 100 shares held will become 1 share. The purpose is to write off accumulated losses of around Rs. 2.41 crore sitting in the debit balance of the profit and loss account, which has nearly wiped out the company's share capital value. The company has no promoters, is engaged in investment business, and reports minimal current assets (Rs. 4.68 lakhs as of Sept 2023). No cash payout is involved and no shareholder liability is being reduced. The scheme was approved by the Board on November 7, 2025, and now requires NCLT approval before becoming effective.
This is a balance sheet cleanup exercise and not a value-creating action. While the share count drops 99%, the underlying economic value of each shareholder's holding stays roughly the same in theory (100 old shares = 1 new share). However, liquidity in the stock will likely shrink dramatically, the share price will adjust downward, and the stock may become even more thinly traded. Small shareholders holding fewer than 100 shares will end up with fractional entitlements that get sold in the market.