NCLT Allahabad Approves Magnum Ventures' Demerger Of Paper Business Into Magnum Paperz

The order was passed by the bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma

Magnum Ventures Limited operates two distinct verticals, paper manufacturing and hospitality. The paper unit is based in Sahibabad, Ghaziabad, while the hospitality arm runs a five‑star all‑vegetarian hotel under the “Country Inn & Suites by Radisson” brand.

Magnum Paperz Limited was incorporated in September 2025 to house the paper business. The scheme envisages transfer of the paper undertaking to Magnum Paperz as a going concern, leaving Magnum Ventures to focus exclusively on hospitality. The boards of both companies approved the scheme on 27 February 2026.

The applicants argued that the demerger was justified on grounds of distinct business nature, operational flexibility, optimized capital structure, independent growth potential and enhanced management focus. They submitted that the proposed scheme of demerger would have a beneficial impact on the shareholders and other stakeholders.

The scheme also provides for reduction of share capital in Magnum Ventures to realign its structure with the residual hotel business, cancellation of pre‑scheme share capital of Magnum Paperz (a wholly owned subsidiary), and issuance of fresh shares to Magnum Ventures' shareholders in the same proportion as their existing holdings.

The share exchange ratio, based on valuation by a registered valuer, stipulates that for every ten equity shares of Magnum Ventures, shareholders will receive two equity shares of Magnum Paperz. Preference shareholders will receive nine new preference shares of Magnum Paperz for every ten preference shares held in Magnum Ventures.

The applicants emphasised that no corporate debt restructuring is envisaged in the proposed Scheme of Arrangement.

They further submitted that the Scheme is in compliance with the Accounting Standards prescribed under Section 133 of the Act and that BSE and NSE have issued no objection letters. It was also submitted that Demerged Company is not a subject matter of dissolution and accordingly, the pending legal proceedings will not be adversely affected by the proposed Scheme of Arrangement and vice versa.

Magnum Ventures had 18,033 equity shareholders, 1 preference shareholder, 1 secured non-convertible debenture holder, 1 secured creditor and 558 unsecured creditors. The preference shareholder consented. Magnum Paperz had 7 equity shareholders and no secured creditors and 1 secured creditor, all of those existed consented to the scheme via the affidavits.

After considering submissions and documents, the Tribunal directed convening of meetings of Magnum Ventures' equity shareholders, secured debenture holders, secured creditors, and unsecured creditors on 20 November 2026 via video conferencing with remote e‑voting. The preference shareholders' meeting was dispensed with, as consent was already obtained.

For Magnum Paperz, meetings of equity shareholders and unsecured creditors were dispensed with, given unanimous consent affidavits, while secured creditors' meeting was unnecessary as none exist.

The Tribunal appointed Gaurav Mahajan as Chairperson, Dhruv Saxena as Alternate Chairperson, and Ramesh Chandra Agarwal as Scrutinizer. The bench directed the applicants to issue notices to Regional Director, Registrar of Companies, Income Tax Department, and BSE.

The bench further directed that the second motion petition can be filed within a week from the date of submission of the report by the Chairperson.

For Applicants: Advocate Kartikeya Goel