On 31st January 2025, the Board of Directors of Texmaco Rail & Engineering Limited (TREL) approved a Scheme of Arrangement with its wholly owned subsidiary, Belgharia Engineering Udyog Private Limited (BEL), under the provisions of the Companies Act, 2013. This restructuring move will see the Infra – Rail & Green Energy Division of TREL transferred to BEL as a going concern on a slump exchange basis.

The Scheme Overview

This Scheme, which requires approval from regulatory and statutory authorities including the National Company Law Tribunal (NCLT) and Stock Exchanges, will result in the transfer of TREL’s Infra – Rail & Green Energy Division to BEL. The scheme will operate from the appointed date and will allow for the continued operations of the transferred business, with significant implications for both companies.

Key Aspects of the Scheme

1. Transfer of Undertaking: The transferred undertaking includes TREL's Infra – Rail & Green Energy Division, which includes areas like hydro power, track laying, and green energy solutions. The value of this transfer will be settled by BEL issuing equity shares and Optionally Convertible Redeemable Preference Shares (OCRPS) to TREL.

2. Regulatory Approvals: The Scheme is contingent upon receiving the necessary approvals from the Stock Exchanges, NCLT, and other regulatory authorities, as well as from the shareholders and creditors of the involved companies.

3. Financial Impact: For the fiscal year 2023-24, the transferred undertaking contributed 15.05% of TREL’s total turnover and 34.43% of its net worth, making this transfer a significant move in the company’s restructuring efforts.

Consideration and Transaction Details

As part of the transaction, BEL will issue 1,50,00,000 equity shares of face value INR 10 each and 9,22,77,390 OCRPS of INR 100 each to TREL as consideration for the transfer of the undertaking. This consideration structure is a part of the Scheme’s detailed terms.

Rationale Behind the Scheme

The rationale for this restructuring is to streamline the business operations of TREL by segregating its diverse business divisions into more focused entities. This move aims to:

• Unlock the value of each vertical.
• Attract fresh investors and partners.
• Provide better management control and a more efficient strategic focus for both companies.

Future Steps

The approval process involves additional steps, including formal approvals from regulatory bodies and shareholder consent. The Scheme, upon final approval, is expected to take effect from the Effective Date, as defined in the Scheme, and will lead to operational and financial changes for both companies.

Conclusion

This Scheme of Arrangement between Texmaco Rail & Engineering Limited and Belgharia Engineering Udyog marks a significant chapter in the corporate restructuring of TREL. By focusing on the growth of its core business areas, TREL aims to position itself better in the evolving market and maximize shareholder value.

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