About Gaekwar Mills Ltd.

Gaekwar Mills Limited (now in liquidation), hereinafter called ‘the Company’, was incorporated on 16th June 1928 under the Baroda State Companies Act. With an object “To carry on the business of spinning, weaving or manufacturing or dealing in cotton or other fibrous substances and the preparation, dyeing or coloring of any of the said substances and the sale of yarn, cloth, or other manufactured fibrous products”.

At the time of incorporation, the registered office of the Company was situated at Talod Road, Billimora, in the then State of Baroda and since the merger of the State of Baroda into the Union of India, the Company became an entity under the Indian Companies Act, 1913 and the registered office of the Company has been in Mumbai since then.

The Company was making profit till 1974. The Company’s Subscribed Equity Capital comprises of 89,000 equity shares of Rs.100/- each, which includes 38,000 equity shares of Rs.100/- each, issued as fully paid bonus shares. Bonus shares were issued in 1942, in the ratio of 3:1, in 1948 in the ratio 4:1, in 1953 in the ratio of 4:1 & in 1972 in the ratio of 1:1, all by capitalizing the reserves created out of profits earned from time to time. The Company incurred losses for the first time in 1975, mainly due to sharp increase in prices of raw cotton and adverse conditions prevailing in the textile industry.

In 1979, the Company filed Company Petition No.365 of 1979 in the Court and got the scheme of compromise/arrangement with the trade creditors of the Company sanctioned. But despite considerable struggle and extensions granted by the Court, the Company could not carry the scheme to its logical conclusion and fulfill all its obligations there under.

In 1982, market conditions became adverse once again and the Company slipped into losses, along with almost all other composite Textile Mills in India. In spite of losses, the Company continued to operate at lower than optimal capacity, up to 1984. Thereafter, the Company faced unprecedented and severe labors problems with the Communist unions attempting to oust the representative union affiliated to the Textile Labour Association, Ahmedabad. There was violence, go-slow and prolonged strikes, ultimately leading to complete closure from late 1984 to early 1986. In spite of re-opening the Mills in 1986, viable operations could not be achieved owing to acute shortage of working capital facilities and reluctance on the part of Banks and Financial Institutions to give timely financial assistance. The Company stopped manufacturing activities since 10th June, 1986 or so. The net worth of the Company was completely wiped out and on 23rd June, 1987, the Company’s Board of Directors was required to make a Reference to the Board for Industrial and Financial Reconstruction (BIFR), which declared the Company as a “Sick Unit” on 29th September 1987.

The winding-up order was passed against the Company by the Hon’ble Bombay High court on 4th February, 2008 and appointed The Official Liquidator of the Court as the Liquidator of the Company.The major shareholders of the Company propounded a Scheme of compromise and / or arrangement between the Company and its equity shareholders; Secured, Unsecured and statutory Creditors and workers u/s. 391, 392 and 393 of The Companies Act, 1956 for revival of the Company and setting aside & stay of the said winding-up order dated 4th February, 2008 and of the proceedings in winding-up and taking the Company out of liquidation. The said Scheme was sanctioned by an order dated 10th September 2010 by the Hon. Bombay High Court and further modified by orders of the Court dated 6th January, 7th January and 8th April 2010.

Though the Company continues to be under liquidation, Directors have been allowed to take steps towards revival of the Company. M/s Platinum Square Private Limited have been inducted as Strategic Partner. The funds brought in by them by way of Equity Capital and Secured Debentures have been used to pay off/settle all old creditors of the Company.

Further, the Board has taken consent of the members to increase paid-up capital from present Rs. 89 lakhs to Rs. 200 lakhs by making preferential offers to existing Strategic Investor as well as another Strategic Investor, M/s Mukesh Babu Financial Services Ltd. This issue of capital is subject to sanction by the Hon. Bombay High Court.

The Company has already drawn up plans for development of an ultra modern township on 60% of the land at Bilimora. The balance 40% of the land would be used to set up a modern integrated textile unit.