MTAR Technologies gets NCLT nod to merge two wholly owned subsidiaries

MTAR Technologies has received approval from the National Company Law Tribunal (NCLT), Hyderabad Bench, to merge two wholly owned subsidiaries, Gee Pee Aerospace and Defence Private Limited and Magnatar Aero Systems Private Limited, into the parent company, as it seeks to consolidate operations, simplify its corporate structure and improve operational efficiency.

In a disclosure to the exchanges on Thursday, MTAR said the tribunal had sanctioned the scheme of amalgamation through an order dated October 28. The company submitted a copy of the order downloaded from the NCLT's official website and said it would provide the certified copy to the stock exchanges once received.

The scheme carries an appointed date of April 1, 2025, even though the NCLT sanctioned the merger on October 28, 2026. Once it becomes effective, the assets and liabilities of both subsidiaries will be transferred to MTAR Technologies, and the two companies will be dissolved without undergoing winding-up proceedings.

Focus on operational consolidation

The merger is intended to bring the businesses under a single corporate entity and enable MTAR to use synergies in equipment and human resources.

The scheme also aims to reduce administrative costs, overheads and duplication, integrate operations and improve management efficiency through economies of scale.

The restructuring involves two companies that are already wholly owned subsidiaries of MTAR.

Consequently, the parent company will not have to issue additional shares in exchange for their shares. The paid-up share capital of the two subsidiaries will be cancelled once the scheme becomes effective.

MTAR's authorised share capital will increase from Rs 66 crore, divided into 6.6 crore equity shares of Rs 10 each, to Rs 66.85 crore, divided into 6.685 crore equity shares of the same face value. The increase reflects the consolidation of authorised share capital under the scheme and does not, by itself, represent a fresh equity issuance.

Employee protection and pending matters

The companies have also undertaken to protect employees covered by the scheme. MTAR told the tribunal that employees of the two subsidiaries would become employees of the parent company without a break in service. It further undertook that employees who were in service as of the appointed date, April 1, 2025, would not be retrenched.

The NCLT order also records the companies' responses to observations raised by regulatory authorities and the Official Liquidator during the approval process. MTAR has undertaken to comply with applicable tax liabilities if any arise in relation to the subsidiaries.

The order clears the way for the proposed corporate restructuring, although the company will still need to complete the formalities required to make the scheme effective.