Shree Rajeshwaranand Paper Mills Ltd: Rs 12 Crore Preferential Allotment Approved

Shree Rajeshwaranand Paper Mills Ltd has approved the preferential allotment of 1.2 crore equity shares, aggregating Rs 12 crore, as part of its corporate insolvency resolution process.

Reader Takeaway: NCLT plan implementation dilutes existing shareholders; RA gains 95% control.

What just happened

The board of Shree Rajeshwaranand Paper Mills Ltd, in a meeting on August 21, 2026, sanctioned the preferential issue of 1,20,00,000 equity shares. Each share has a face value of Rs 10, totaling Rs 12,00,00,000 (Rs 12 Crore). This action is a step towards implementing the resolution plan approved by the National Company Law Tribunal (NCLT), Ahmedabad.

The board had initially approved the equity infusion and restructuring proposal on July 10, 2025.

Why this matters

This preferential allotment will drastically change the company's shareholding structure. Post-allotment, existing shareholders will hold only 5% of the company, while the Resolution Applicant (RA) and its affiliates will own 95%. This signifies a substantial dilution of ownership for current investors.

The backstory

The company has been undergoing a Corporate Insolvency Resolution Process (CIRP). The NCLT, Ahmedabad, approved the Resolution Plan on November 27, 2024. The certified copy of this order was received by the company on November 29, 2024. The current allotment is a direct consequence of this NCLT order.

What changes now

The preferential allotment will lead to a significant change in the control and ownership of Shree Rajeshwaranand Paper Mills Ltd. Pratik Kakadia will become a major shareholder, receiving 6,500,000 shares (51.35% of post-allotment capital). Ramjibhai Kakadia will also hold a substantial stake with 3,813,810 shares (30.13%). The company is also seeking approval from BSE Limited for the listing of these new shares.

Risks to watch

The primary risk for existing shareholders is the severe dilution of their stake. The change in control to the resolution applicant may also lead to strategic shifts in the company's operations and management. Investors need to closely monitor the stock exchange's approval for listing and the formal completion of the allotment process.

Peer comparison

Companies emerging from CIRP often undergo similar restructuring, involving significant capital infusion and shareholding changes. The high degree of dilution in this case is typical for such resolution processes aimed at reviving distressed entities.

Context metrics (time-bound)

• Preferential Allotment Amount: Rs 12 Crore
• Number of Equity Shares Allotted: 1.2 Crore
• Face Value per Share: Rs 10
• NCLT Approval Date: November 27, 2024
• Board Approval for Allotment: August 21, 2026

What to track next

Investors should watch for the in-principle approval from BSE Limited for the listing of the new shares. The formal completion of the share allotment and any subsequent announcements regarding the company's operational plans under the new management will be crucial.