Kanpur Flowercycling Private Limited Vs Fleather Private Limited (NCLT Allahabad)
The matter concerns a joint First Motion Application filed before the NCLT, Allahabad Bench, seeking sanction of a Scheme of Arrangement under Sections 230 and 232 of the Companies Act, 2013 for the demerger of the “Fleather Business” from the Demerged Company into the Resulting Company.
The Demerged Company is engaged in the manufacturing, marketing, and distribution of products made from collected flower waste, while the Resulting Company manufactures, markets, and distributes leather products made from biomaterials, including mycelium. The registered offices of both companies are situated in Uttar Pradesh, bringing the matter within the territorial jurisdiction of the Tribunal.
According to the application, the Demerged Company operates through two distinct business verticals—Flower Business and Fleather Business. The Boards of both companies considered the risks and rewards associated with these businesses to be different in nature. Since the Fleather Business attracted interest from strategic investors, the companies proposed its demerger into a separate entity on a going concern basis. The stated objectives included providing greater business focus, enabling independent management, facilitating separate business strategies, and promoting efficient growth of both business verticals.
The Boards of Directors of both companies approved the proposed Scheme on 25 February 2026, subject to the Tribunal’s sanction. The appointed date under the Scheme was fixed as 1 January 2026 or such other date as approved by the Tribunal and acceptable to the Boards. The companies also placed on record their audited financial statements for the year ended 31 March 2025, unaudited provisional financial statements as of 31 January 2026, and unaudited provisional financial information of the Demerged Undertaking as of 31 December 2025. Statutory auditors certified that the Scheme complied with the accounting standards prescribed under Section 133 of the Companies Act.
