Penny Stock Surprise: Shareholders Approve 98% Capital Reduction To Wipe Out Rs 86.71 Crore Losses

Shree Securities’ shareholders have approved a plan to reduce the company’s paid-up equity capital by 98 per cent, or Rs 78.204 crore, as the Kolkata-based non-Banking financial company seeks to write off accumulated losses of Rs 86.711 crore and repair its impaired balance sheet.

The proposal was approved at the annual general meeting on September 29, following board approval on September 4. It remains subject to confirmation by the National Company Law Tribunal, after which the company will file the tribunal order and approved minute with the Registrar of Companies.

Under the scheme, paid-up equity capital will be reduced from Rs 79.8 crore, comprising 79.8 crore equity shares of Rs 1 each, to Rs 1.596 crore, comprising 1.596 crore shares of Rs 1 each. The company will cancel and extinguish 78.204 crore shares on a proportionate basis, with the corresponding capital used to eliminate losses carried in its books.

Shree Securities said sustained business losses amid adverse commercial conditions had created a disconnect between the paid-up capital shown in its accounts and the realisable value of its assets. The accumulated deficit had also constrained access to equity and Debt Funding on commercially viable terms, limiting investment, working-capital deployment and expansion.

The exercise is therefore an accounting clean-up rather than a cash return to investors. The company said the scheme involves no payout or financial outlay, does not transfer assets or liabilities, and will not affect creditor rights, employee conditions or day-to-day operations. Its shares will remain listed on BSE and the Calcutta Stock Exchange.

After the reduction, Shree Securities proposes to consolidate the Rs 1.596 crore capital into 15.96 lakh equity shares of Rs 10 each. The company said the restructuring will preserve the relative ownership of shareholders and will not alter promoter holding, management or the broader shareholding pattern.

However, shareholders should note an apparent numerical inconsistency in the disclosed entitlement. A 98 per cent reduction would leave 20 shares of Rs 1 each for every 1,000 existing shares, while a subsequent 10-for-1 consolidation would mathematically result in two shares of Rs 10 each. The company’s announcement, however, states that holders of every 1,000 shares of Rs 1 each would receive 20 shares of Rs 10 each. The final tribunal-approved scheme and record-date notice will be important in clarifying the operative entitlement.

The balance-sheet action follows a sharp reversal in the company’s reported profitability over recent years. Shree Securities recorded a loss of Rs 59.37 crore in FY24, according to historical annual data, before returning to a profit of Rs 65.72 lakh in FY25 and Rs 6.17 lakh in FY26. Its FY26 profit was modest relative to the accumulated losses now proposed to be written off, underlining why the capital reduction is material to its financial presentation.

For FY26, revenue from operations rose 9.5 per cent to Rs 74.53 lakh, while profit after Tax declined 90.6 per cent from the preceding year as expenses and finance costs increased. The company is an RBI-registered non-deposit-taking NBFC and reported no public deposits outstanding as of March 31, 2026.

As of 3.50 pm on October 5, 2026, Shree Securities shares were trading at Rs 0.19. The stock was at its 52-week low of Rs 0.19 and was 36.7 per cent below its 52-week high of Rs 0.30. Over one year, the shares declined 34.48 per cent, compared with a 3.22 per cent fall in the BSE 500, representing an underperformance of about 31.26 percentage points.

The company will set the record date within 90 days of the scheme becoming effective. Fractional entitlements will be aggregated, allotted to a board-nominated trustee and sold, with net proceeds distributed among eligible shareholders.

Disclaimer: The article is for informational purposes only and not investment advice.