Balkrishna Paper Mills capital reduction: SEBI rule 2026

What changed for Balkrishna Paper Mills

Balkrishna Paper Mills Limited has received return letters from BSE and NSE dated April 13, 2026 for its proposed Scheme of Reduction of Share Capital. The company said the exchanges returned the draft scheme because Regulation 37 is not applicable to the proposed transaction under the revised SEBI Listing Regulations framework. The change stems from an amendment effective December 13, 2024, which exempts certain schemes that write off accumulated losses against share capital on a pro rata basis.

For the company, the exchange return does not mean the plan has been dropped. Balkrishna Paper Mills has stated the scheme remains subject to multiple statutory and regulatory approvals. The key approvals it has flagged include the National Company Law Tribunal (NCLT) and shareholder consent.

The exchange letters and Regulation 37(6)

In its disclosures, the company linked the exchange return to the non-applicability of Regulation 37 after the December 13, 2024 amendment. Under this framework, schemes that involve writing off accumulated losses against share capital uniformly for shareholders on a pro rata basis are treated differently from schemes that require a detailed SEBI review through the stock exchanges.

Balkrishna Paper Mills said the exchanges now classify the scheme as a disclosure rather than a proposal needing a full review process under Regulation 37. As a result, BSE and NSE returned the draft scheme to the company, citing the regulatory change.

Even with this procedural shift at the exchange level, the company has emphasised that the scheme still requires approvals from other authorities. It has specifically referenced NCLT and shareholder approvals as continuing requirements.

What the company’s scheme is intended to do

The scheme, as described by the company, involves writing off accumulated losses against share capital in a uniform manner for shareholders on a pro rata basis. It also includes a reduction involving unlisted Non-Convertible Redeemable Preference Shares (NCRPS) issued to promoters.

In earlier board-approved details, the company framed the proposal as a capital restructuring step aimed at rationalising the capital structure and reflecting the financial position more appropriately. Balkrishna Paper Mills has disclosed accumulated losses of ₹278.39 crore as per limited reviewed financial statements as on September 30, 2025.

Board approval and the December 23, 2025 meeting

The scheme was originally approved by the Board of Directors on December 23, 2025, subject to receipt of statutory and regulatory approvals. The board meeting was held at the company’s registered office in Mumbai and ran from 2:00 PM to 6:00 PM.

The company said the board approved supporting documents and reports associated with the scheme. These included a valuation report from registered valuer M/s SSP & Co., a fairness opinion from SEBI-registered merchant banker M/s Rarever Financial Advisors Private Limited, and a certification from statutory auditor DSM & Co.

How the equity share capital is proposed to be restructured

As per the disclosed scheme structure, the company proposed to reduce the face value of its equity shares from ₹10 per share to ₹1 per share while keeping the number of shares unchanged at 3,22,19,532 equity shares. The revised equity share capital was stated as ₹3.22 crore. The company also disclosed that no consideration would be payable to equity shareholders under this reduction.

The fairness opinion note also described the transaction as a 90% reduction in paid-up equity share capital, implemented through the face value reduction. It also stated that no new equity shares would be allotted pursuant to the capital reduction.

In addition, the scheme proposed a sequence for writing off losses, starting with utilisation of the Securities Premium Account balance of ₹23.28 crore, followed by adjustment through the equity face value reduction.

What happens to the preference share capital

The scheme also proposed the complete cancellation of 1,10,00,000 preference shares of ₹100 each. The total preference share capital elimination disclosed by the company was ₹110.00 crore.

On consideration to preference shareholders, the disclosed scheme terms noted that payment would be deferred until adequate funds are available. The amount was proposed to be recorded as an unsecured, non-interest-bearing loan.

Approvals still needed: NCLT and shareholders

Although the stock exchanges returned the draft scheme due to the regulatory exemption, Balkrishna Paper Mills has stated that the scheme remains subject to statutory and regulatory approvals. The company has specifically called out NCLT approval and shareholder approval as necessary.

The company has also described shareholder approval through a postal ballot via remote e-voting as part of the process it had planned. In earlier disclosures around the scheme, the approval chain referenced stock exchange permissions, SEBI clearance, and tribunal approval. With the exchanges treating the matter as a disclosure under the amended rule, the company’s next steps continue to focus on the remaining approval checkpoints it has already identified.

Context: rights issue and efforts to improve financial standing

Balkrishna Paper Mills has referred to a history of insolvency proceedings and has positioned the capital reduction as part of steps to improve its financial standing. It has also disclosed that it raised ₹45.10 crore through a rights issue in April 2024 to address debt.

Separately, the company has disclosed to BSE and NSE that it does not qualify as a Large Corporate under SEBI’s framework, referencing the October 19, 2023 circular. (The disclosure excerpt provided does not include the outstanding long-term borrowing figure.)

Key facts at a glance

Why the regulatory change matters

The exchange communication shows how the December 13, 2024 amendment to Regulation 37(6) changes the processing route for certain capital reduction schemes. In Balkrishna Paper Mills’ case, the company has said this means the scheme is treated as a disclosure rather than going through a full SEBI review process via the stock exchanges.

That procedural difference can affect the sequence of actions a company needs to take when executing a court or tribunal-driven scheme. However, the company’s disclosures make it clear that the exchange return does not remove the need for NCLT and shareholder approvals, which remain central to implementing a reduction of share capital.

Conclusion

Balkrishna Paper Mills’ capital reduction plan has moved into a different regulatory lane after BSE and NSE returned the draft scheme, citing the post-December 13, 2024 Regulation 37 exemption for pro rata loss write-off structures. The company has reiterated that the scheme is still subject to statutory and regulatory clearances, including NCLT approval and shareholder consent. The next milestones, based on the company’s own stated process, hinge on completing these approvals before any reduction can take effect.