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.