NCLT Indore Admits Second Motion In Composite Scheme Of HEG Demerger and Bhilwara Energy Merger

The Indore Bench of the National Company Law Tribunal (NCLT) has sanctioned a composite scheme of arrangement involving HEG Ltd, HEG Graphite Ltd and Bhilwara Energy Ltd under Sections 230 to 232 of the Companies Act, 2013.

A Bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta sanctioned the scheme, which provides for the demerger of HEG Ltd's graphite business into HEG Graphite Ltd and the amalgamation of Bhilwara Energy Ltd into HEG Ltd. It held:

“…the Scheme is fair, reasonable and not contrary to any provision of law or to public policy or public interest…”

HEG Ltd, incorporated in 1972, is engaged in manufacturing graphite electrodes and power generation. The company proposed to separate its graphite and energy businesses to enable independent growth strategies.

HEG Graphite Ltd was incorporated in 2024 as a wholly owned subsidiary to receive the demerged graphite undertaking. Bhilwara Energy Ltd, incorporated in 2006, was proposed to be amalgamated into HEG Ltd to consolidate its energy operations.

The companies had earlier filed a first motion application, which was allowed by the NCLT on 25 March 2026. Meetings of shareholders and creditors were subsequently convened and the scheme received overwhelming approval.

Equity shareholders of HEG Ltd approved the scheme with 99.9997% in value, while its secured and unsecured creditors approved it with 100% in value. Equity shareholders of Bhilwara Energy Ltd approved the scheme unanimously.

Under the scheme, equity shareholders of HEG Ltd will receive shares in HEG Graphite Ltd in a 1:1 ratio, while shareholders of Bhilwara Energy Ltd will receive shares in HEG Ltd in an 8:7 ratio. The appointed date was fixed as 1 April 2024.

The petitioners submitted that the restructuring would unlock value, segregate businesses with distinct risk profiles, enable focused strategies and improve operational efficiency.

The statutory auditors certified that the accounting treatment proposed under the scheme conformed with Section 133 of the Companies Act, 2013, which provides for accounting standards. Valuation was carried out by PwC Business Consulting Services LLP and supported by a fairness opinion from ICICI Securities.

As HEG Ltd is a listed company, it obtained observation letters from the BSE and National Stock Exchange of India (NSE) in January 2026 confirming compliance with applicable Securities and Exchange Board of India (SEBI) regulations.

The Official Liquidator raised concerns regarding the treatment of deferred tax. The petitioners clarified that the amount represented a net deferred tax asset and not a liability. The Registrar of Companies reported that there were no complaints, inquiries, inspections, investigations or prosecutions pending against the petitioner companies.

The Regional Director questioned the ante-dated appointed date and the incorporation of HEG Graphite Ltd after the appointed date. The petitioners explained that regulatory approvals from SEBI and the stock exchanges had delayed the filing and submitted that there was no statutory bar requiring the resulting company to be in existence on the appointed date.

The Income Tax authorities confirmed that there were no pending demands or proceedings against the companies.

The Bench noted that the requirements under Sections 230 to 232 of the Companies Act, 2013, which govern schemes of arrangement, mergers and demergers, had been complied with and that the shareholders and creditors had approved the scheme by the requisite majorities.

It observed that valuation is a matter of commercial wisdom in the absence of fraud and found the appointed date to be justified in view of the regulatory timelines. The Bench also found the share exchange ratios to be fair and reasonable.

Accordingly, the NCLT sanctioned the composite scheme of arrangement involving HEG Ltd, HEG Graphite Ltd and Bhilwara Energy Ltd.