As on: Apr 20, 2024 05:07 AM
To,
The Members,
INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)
Pursuant to the orders of Hon'ble National Company Law Tribunal (NCLT), Chandigarh, Corporate Insolvency Resolution Process (CIRP) has been initiated in respect of SRS Limited (“the Company”) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) with e ect from 21st August, 2018.
In this connection, Sh. Ashok Kumar Gulla has been appointed as Resolution Professional (RP) to carry out the activities relating to CIRP as per the rules, regulations and guidelines prescribed by the Code.
Since the Company is under Corporate Insolvency Resolution Process (CIRP), as per Section 17 of the Insolvency & Bankruptcy Code, from the date of appointment of the Resolution Professional -(a) the management of the a airs of the company shall vest in the Resolution Professional.
(b) the powers of the Board of Directors of the company shall stand suspended and be exercised by the Resolution Professional.
(c) the o cers and managers of the company shall report to the resolution professional and provide access to such documents and records of the company as may be required by the Resolution Professional.
(d) the nancial institutions maintaining accounts of the company shall act on the instructions of the Resolution Professional in relating to such accounts furnish all information relating to the company available with them to the Resolution Professional.
FINANCIAL RESULTS
The nancial performance of your Company for the year ended 31st March, 2019 is summarized below: -
(` in lacs)
8,869.68
11,372.05
311.11
98.08
RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS The Company has suered losses during the financial year under review. Continuing Operations
The Company reported total revenue of Rs.88.69 Crore in FY 2018-19 from Continuing Operations as compared to Rs.113.72 Crore reported in FY 2017-18. The Company has su ered Total Loss from Continuing Operations of Rs. (5401.23) Crore in F.Y. 2018-2019 as compared to Total Loss of Rs. (7414.74) Crore in F.Y.2017-2018.
Discontinued Operations
There was no discontinued operations during the F.Y.2018-2019 but in F.Y.2017-2018 the Company has su ered Total Loss from Discontinued Operations of Rs.1386.90 Crore.
Total Comprehensive Loss from Continuing & Discontinued Operations
The Company has su ered Total Comprehensive Loss from Continuing & Discontinued Operations of Rs. 54.27 Crore in F.Y. 2018-2019 as compared to Total Comprehensive loss of Rs. 1460.87 Crore in F.Y.2017-2018.
Material Changes affecting the financial position of the Company which have occurred between the F.Y.2018-2019 and the date of this report:
During the financial year under review, the major events which have affected the Compnay are as follows:
Dr. Anil Jindal, Chairman (Whole-Time Director)-Promoter and Sh. Bishan Bansal, Promoter of the Company were arrested on 5th April, 2018 and are in judicial custody under FIR No.111 130/2018 and FIR No.483/2017 since 11th April, 2018 for committing fraud for the estimated amount involved 10 11 Crores (approx.).
Due to this reason, there were frequent resignations of Directors as well as Company Secretary & Chief Financial Officer since April, 2018.
There was no proper composition of the Board. Most of the senior employees and other sta had also resigned.
The State Bank of India led an application before Hon'ble NCLT, Chandigarh under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) for initiating Corporate Insolvency Resolution Process (“CIRP”) of SRS Limited. The application was admitted vide Hon'ble NCLT, Chandigarh Order dated 21.08.2018 and Mr. Ashok Kumar Gulla, Insolvency Professional, having IBBI Regn. No. IBBI/IPA-003/IP-N00024/2017-2018/10174, was appointed as Interim Resolution Professional (“IRP”).
Further, pursuant to the order of NCLT, a public announcement of CIRP was made on August 24, 2018 and a Committee of Creditors (COC) was formed pursuant to the provisions of the code and COC held their first meeting on September 20, 2018 (E-voting results declared on September 26, 2018) and inter alia con rmed Interim Resolution Professional as Resolution professional (RP) for the Company.
As per the Insolvency and Bankruptcy Code, 2016 public announcement were made inviting the claims from the creditors and during the Corporate Insolvency Resolution Process (“CIRP”) Expression of Interest (“EOI”) were invited for submitting the Resolution Plan for SRS Limited. The Resolution Plans received from the applicants were placed before the Committee of Creditors for approval. The plan submitted did not get through and an application under Section 33 of the Insolvency and Bankruptcy Code, 2016 were led for the suitable orders.
The Company has not complied with the various provisions of the Companies Act, 2013 and SEBI (LODR), 2015. Due to this reason the authorities has imposed penalties on the Company. The overall working of the Company has been affected since April, 2018.
DIVIDEND
Your Company is incurring losses, hence, unable to recommend any dividend for the Financial year 2018-19. The details of amount lying as unclaimed in the Unpaid Dividend Account of the Company for the Dividend declared for the financial year 2011-12 & 2012-13 are given in the Corporate Governance Report.
SHARE CAPITAL
The paid up Equity Share Capital as at 31st March, 2019 was Rs.278, 58, 20,260/- During the year under review, your Company did not issue any further Capital.
Equity Shares of your Company are listed at BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Since, April, 2018, due to frequent resignations of Directors, the Company is not complying with the provisions of the Companies Act, 2013 and SEBI (LODR), 2015 in respect of Board of Directors and Composition of Committees.
The tenure of Dr. Anil Jindal, as a Whole-Time Director has been expired on 31st May, 2018. He has not reappointed as Whole-Time Director as he is under judicial custody since 11th April, 2018. He is disquali ed u/s 164(2) of the Companies Act, 2013.
The tenure of Sh. Raju Bansal, Whole-Time Director has been expired on 30th June, 2019. He was not reappointed as he was disquali ed u/s 164(2) of the Companies Act, 2013.
Dr. Anil Jindal and Sh. Raju Bansal have been declared disquali ed u/s 164(2) of the Companies Act, 2013 from 30/09/2017 to 30/09/2022 by the Registrar of Companies, NCT of Delhi & Haryana along with other ex-directors.
Sh. Vaibhav Gupta, Independent Director, has resigned from directorship of the Company on 1st April, 2018, due to personal and unavoidable circumstances.
Sh. Lalit Kumar, Independent Director, has resigned from directorship of the Company on 9th April, 2018, due to other preoccupations. Sh. Jogindar Lal Chhabra, Independent Director, has resigned from directorship of the Company on 7th May, 2018, due to some unavoidable reasons & circumstances. Sh. Sachin Goyal, Chief Financial Officer, has resigned from the Company on 28th April, 2018.
Ms. Navneet Kwatra, C.O.O. & Company Secretary, has resigned from the Company on 9th May, 2018.
Sh. Vinod Kumar has resigned from the Directorship on 1st May, 2018 and has led his resignation with MCA in Form-DIR-11.
Sh. Rajesh Yadav was appointed as an Additional (Independent) Director of the Company on 9th May, 2018. He has given his resignation to Resolution Professional but it was not tabled before the CoC. He has led his form DIR 11 on 12.09.2018 on MCA.
Sh. Yogesh Kumar was appointed as an Additional (Independent) Director of the Company on 9th May, 2018. He has given his resignation to Resolution Professional. but not tabled before the CoC. Sh. Sandeep was appointed as an Additional (Non-Executive) Director of the Company on 14th August, 2017. He has resigned from the Directorship on 04.07.2018 and has led his resignation with MCA in Form-DIR-11.
Mr. Vikash Sharma, Chartered Accountant was appointed as Chief Financial Officer of the Company w.e.f. 1st March, 2019.
Ms. Jyotsna Nanda, was appointed as a Company Secretary & Compliance Officer of the Company w.e.f. 2nd April, 2019. Due to technical error on the MCA portal, the Company could not led the Form-DIR-12 for appointment of CFO & Company Secretary but the same was intimated to the BSE & NSE .
BOARD MEETINGS
As per the submissions given to BSE & NSE there was three (3) meetings of the Board of Directors were held during the year under review.
Details in respect of frauds reported by auditors u/s 143(12) other than those which are reportable to the Central Government.
The Chairman of the Company, Dr. Anil Jindal is under Judicial Custody under FIR No.111 130/2018 and FIR No.483/2017 since 11th April, 2018.
REMUNERATION POLICY
Information regarding Remuneration Policy is given in the Corporate Governance Report.
COMPOSITION OF COMMITTEES
Since April, 2018, there was frequent resignations of Directors in the Company. There was no sufficient number of Directors available on the Board and no committees was there.
Hence, the Company is not complying with the provisions of the Companies Act, 2013 and SEBI (LODR), 2015 in respect of Composition of Committees.
Further, since 21st August, 2018 the Company is under Corporate Insolvency Resolution Process. The powers of Board of Directors and Committees are suspended under Insolvency & Bankruptcy Code, 2016.
KEY MANAGERIAL PERSONS (KMPS)
Following are the whole time key managerial personnel of your Company, who held such offices as are mentioned against their respective names:
1. Executive Chairman:- Dr. Anil Jindal (tenure expired on 31st May, 2018)
2. Whole Time Director:- Mr. Raju Bansal (tenure expired on 30th June, 2019)
3. Chief Financial Officer:- Mr. Vikash Sharma (Appointed on 1st March, 2019)
4. Company Secretary:- Ms. Jyotsna Nanda (Appointed on 2nd April, 2019) LOANS, GUARANTEES AND INVESTMENTS
Your Company has not given guarantee in favour of any person/company during the financial year 2018-19.
The Company has not given any loans and has not made investments u/s 186 of the Companies Act, 2013 during the F.Y.2018-2019.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
There being no ‘material' related party transactions as defined under the Companies Act, 2013 read with Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which may have potential conflict with the interest of your Company at large.
Hence, there are no details to be disclosed in Form AOC-2 in that regard.
STATUS OF BANK LOANS
Due to liquidity problems, the Company has been irregular and classified as NPA mainly due to non-servicing of interest and other related charges for the fund based borrowings availed from consortium of Banks for the aggregate outstanding amounting to Rs. 105670 Lacs as on 31st March, 2019.
As per the Insolvency and Bankruptcy Code, 2016 public announcement were made inviting the claims from the creditors and during the Corporate Insolvency Resolution Process (“CIRP”) Expression of Interest (“EOI”) were invited for submitting the Resolution Plan for SRS Limited. The Resolution Plans received from the applicants were placed before the Committee of Creditors for approval. The plan submitted did not get through and an application under Section 33 of the Insolvency and Bankruptcy Code, 2016 were led for the suitable orders FIXED DEPOSITS
Due to liquidity crunch in the Company, the Company was not able to maintain liquid assets for the year ended 31st March, 2017, 31st March, 2018 & 31st March, 2019 as required under Section 73(2) (c) of the Companies Act, 2013 read with Rule 13 of the Companies (Acceptance of Deposits) Rules, 2014.
The Company had led an application with National Company Law Tribunal (NCLT) for getting extension of time for repayment of Deposits and NCLT has passed the order on 20th October, 2016 granting extension of time to the Company for repayment of Deposits.
The NCLT has granted further extension vide its order dated 2nd February, 2017 for interest payments by 31st March, 2017 and Principal payments by 30th June, 2017 in accordance with its earlier Order dated 20th October, 2016. But the Company has not complied these Orders. The NCLT has issued nal Order on 21st December, 2017.
The Company had led an appeal with the National Company Law Appellant Tribunal (NCLAT), New Delhi on 18th January, 2018 against the NCLT order dated 21st December, 2017and the said appeal has been withdrawn by the Company on 8th March, 2018.
Subsequently, Hon'ble NCLT Chandigarh vide its order dated August 21, 2018 initiated the Corporate Insolvency Resolution Process of SRS Limited.
UNCLAIMED REFUND & INTEREST ON REFUND ACCOUNT
The Company was required to transfer the amount of Rs.1,49,900/-stands in the Share Application Account for Refund and Rs.29,277/- as unclaimed in the Interest on Refund Account maintained with the State Bank of India, for IPO of the Company within 90 days of the AGM held on 14th May, 2019 for the F.Y. 2017-2018 in the Investor Education & Protection Fund Account and the same is under process.
AUDITORS
Statutory Auditors
M/s. SVP & Associates, Chartered Accountants and M/s. Oswal Sunil & Company, Chartered Accountants, Joint Statutory Auditors of the Company, vide AGM held on 30th September, 2016 to conduct Statutory Audit for Five Consecutive AGMs i.e. for F.Y. 2016-2017 to F.Y. 2020-2021.
Now, the requirement to place the matter relating to appointment of Statutory Auditors for rati cation by members at every Annual General Meeting has been done away with by the Ministry of Corporate A airs, New Delhi vide its noti cation dated 7th May, 2018.
Accordingly, the appointment of Statutory Auditors, who were appointed in the 16th Annual General Meeting held on 30th September, 2016 continue to hold office till the conclusion of 21st Annual General Meeting.
Internal Auditors
No Internal Audit was conducting during the year.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Jatin Singal & Associates, Company Secretaries, to undertake the Secretarial Audit of the Company.
The Secretarial Audit Report for the year 2018-19 given by M/s. Jatin Singal & Associates, in the prescribed form MR-3 is annexed to this Report as Annexure-I.
Pursuant to Regulation 24 of SEBI (LODR), 2015 the Secretarial Audit Report of Material Subsidiary i.e. SRS Entertainment India Ltd. has also been annexed to this report as Annexure - I (A).
Cost Auditor
The provisions of Section 148 of the Companies Act, 2013 are not applicable to the Company, during the year under review.
AUDITORS' REPORT
The Joint Statutory Auditors' M/s. SVP & Associates, Chartered Accountants and M/s. Oswal Sunil & Company, Chartered Accountants have given the following Qualifications in their Joint Statutory Audit Report:
(a) Auditors' Qualification:
Refer Note 1 to the standalone financial statements, in respect of preparation of financial statements of the Company on going concern basis for the reasons stated therein. As on 31st March, 2019, the Company has negative net worth of Rs. 103167 lakhs and the Current Liabilities exceed Current Assets by Rs. 118838 lakhs. The Company has obligations towards fund-based borrowings aggregating Rs.105670 lakhs, that are due/overdue and are payable to the bankers. Further, there are liabilities towards public deposits amounting to Rs.9225 lakhs, operational creditors and statutory dues. Above stated liabilities are showing differences as stated in Note 36. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as going concern and therefore the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. As a result of ongoing matters, we are unable to determine as to whether any adjustment that would have been necessary and required to be made in respect of trade receivable, trade payables, borrowings, current liabilities, loans and advances and contingent liabilities, as at 31st March, 2019; and in respect of the corresponding possible impact of such items and associated elements on the statement for the year ended on that date, should the Company be unable to continue as a going concern. The ultimate outcome of these matters is at present not ascertainable. Accordingly, we are unable to comment on the consequential impact, if any, on the accompanying standalone financial statements.
Management Reply
During the CIRP the Resolution Professional invited Expression of Interest for Submission of Resolution Plan for SRS
Limited. Potential Resolution Applicants had submitted their Resolution Plan with the Resolution Professional which were placed for approval before the Committee of Creditors, the Resolution Plan received was not approved by Committee of Creditors and hence the Resolution Professional has led application under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 on May 17, 2019 praying for the appropriate order including Liquidation. As per Regulation 32 (e) and 32 (f) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 the "The Liquidator may Sell the Corporate Debtor as the Going Concern" and "The Liquidator may sell the business of the Corporate Debtor as the going concern" i.e. Cinema division, Since the order of Liquidation has not been pronounced till the date of approval of these Results and, further, the Corporate Debtor can be sold as the Going Concern in the Liquidation process as well, Hence the results for the year ended March 31, 2019 has been prepared on the Going Concern Basis.
(b) Auditors' Qualification:
Refer Note 36 to the statement, in respect of various claims, submitted by the operational creditors, employees and other creditors of the Company to Resolution Professional (RP) pursuant to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, that are showing differences with book balances.
Auditors are unable to comment upon the adjustments required and consequential impact on the accompanying statements.
Auditors further refer Note 37 in respect of non-availability of con rmations of trade receivables, loans & advances and trade payables. Balance con rmations, wherever received in case of trade receivables, loans & advances and trade payables, are under reconciliation and impact is pending to be given in books of account.
During the CIRP process claims from the operational creditors, employee and other creditors were invited, The amount of claims received from the certain parties varies from the books balance, The effect of the same has not been recorded in the books. The difference is immaterial considering the size of the financial statements of the company and same has been considered as contingent liability.
(c) Auditors' Qualification:
Refer Note 38 to the standalone financial statements, in respect of balances available with statutory authorities and input credits aggregating Rs.9.93 lakhs that are subject to reconciliation, ling of return and admission by the respective statutory authorities and no provision has been made. Thus, Auditors are unable to comment whether any provision for impairment in the value of these balances is required.
The balance recoverable pertains to the period prior to initiation of Corporate Insolvency and Resolution Process and the amount recoverable is from Statutory authorities hence no provision for impairment is required.
(d) Auditors'Qualification:
Refer Note 31 to the statement. As mentioned in the said Note, no interest expense has been booked on borrowings for the period after initiation of Corporate Insolvency Resolution Process (CIRP) i.e. 21st August, 2018 to the reporting period. Syndicate Bank and Oriental Bank of Commerce have charged interest aggregating Rs. 657 lacs after initiation of CIRP i.e. 21st August, 2018 to the reporting period, however, the effect of such interest charged in the bank statements has not been given in the books of account. In absence of necessary information, Auditors are unable to comment upon the shortfall in provision for interest and consequential impact on the accompanying standalone financial statements.
The Company is under Corporate Insolvency Resolution Process vide order of Hon'ble NCLT Chandigarh Vide order dated August 21, 2018. As the Financial Creditors including the deposit holders has to submit their claims amount upto the date of initiation of CIRP under IBC, 2016 i.e. August 21, 2018, Hence they have submitted their claims before Resolution Professional till August 21, 2018, and the company has recorded the liability in the books of accounts as per claims submitted by financial creditors. Under CIRP the amount to be paid will be based on the claims as accepted on the date of commencement of CIRP, Hence, No interest has been booked in the books of accounts for the period after commencement of CIRP i.e. August 21, 2018 to the reporting period.
(e) Auditors' Qualification:
Refer Note 31 to the statement. As mentioned in the said Note, no interest expense has been booked on public deposits for the period after 21st August, 2018. Auditors also observed that on matured public deposits, interest was being provided @11.75% p.a. As per Rule 17 of Acceptance of Deposits Rules, 2015, a company shall pay a penal rate of interest of eighteen per cent p.a. for the overdue period of deposits, whether secured or unsecured, matured and claimed but remaining unpaid. In absence of necessary information, Auditors are unable to comment upon the shortfall in provision for interest and consequential impact on the accompanying standalone financial statements.
The Company had led for granting the extention of time for the repayment of matured Public Deposits and the Hon'ble NCLT vide its order dated October 20, 2016, had allowed the company to pay the delayed repayment at the rate of 11.75% Hence the Interest has been provided at the rate of 11.75%.
As the public deposit holders has to submit their claims amount till the date of initiation of CIRP under IBC, 2016 i.e. August 21, 2018. The amount to be paid to the deposit holders will be based on the claim received from the creditors as on the commencement of the CIRP
(f) Auditors' Qualification:
The Company has investment of Rs. 2,676 lakhs in wholly owned subsidiary companies Rs. 2,666 lakhs in SRS
Entertainment India Ltd and Rs. 10 lakhs in SRS Smart Retail Ltd. Additionally, the Company has to recover Rs. 22 lakhs from SRS Smart Retail Ltd, on account of sales/advance given. As per information and explanation given to Auditors, net worth of wholly owned subsidiary companies is below the Company's exposure to them. No provision for diminution/doubtful amount has been made in investments made and/or other amounts recoverable. Auditors are unable to comment on the appropriateness of the carrying value of such investments and other amounts recoverable and their consequential impact on the financial results for the year and the financial position of the Company as at 31stMarch, 2019.
SRS Entertainment India Limited is a wholly owned subsidiary, The Equity of the company shall be sold during the liquidation process and the subsidiary is a going concern and shall regain its value in the Long term and the Investment in the SRS Smart Retail Limited is immaterial.
(g) Auditors' Qualification:
Refer Note 3 to the standalone financial statements. Property, Plant and Equipment (PPE) amounting to Rs. 217 lakhs (WDV) were written o and Loss amounting to Rs. 738 lakhs was incurred on sale of PPE (Prior to CIRP). Further Provision for doubtful Trade Receivables and Loans & Advances was made and Receivables/Loans &
Advances were written o aggregating Rs. 127.62 lakhs during the year ended 31stMarch, 2019. In this respect management's representation was received that the write o s/provisions were made and losses were incurred since the assets were found short or were discarded or were doubtful of recovery due to lack of proper controls and follow-up. Also, Provision for doubtful Trade Receivables and Loans & Advances no longer required was written back aggregating Rs. 86.15 lakhs during the year ended 31st March, 2019.
Foreign Trade Receivables aggregating Rs.14653 lakhs* as on 31st March, 2019 (including Rs.14191 lakhs out of sale to parties from inventories sent by NSEZ unit of the Company located in India to UAE Branch through Branch transfer) on account of sale during the FY 2015-16 and FY 2016-17 in UAE were not backed by any security. Furthermore, in terms of RBI regulations, in case of delay in export realisations beyond the stipulated period, application though required, was not made to the Bank. In absence of alternative corroborative evidence, Auditors are unable to comment on the recoverability of foreign outstanding.
*provided for in books of account.
The transaction of sale and writing o of property, plant and equipment pertains to period prior to commencement of CIRP i.e. August 21, 2018 due to lack of proper control existent then, and the same were taken care by erstwhile directors were not available for comments. However, the matter of recovery of these property, plant and equipment is pending with Hon'ble NCLT Chandigarh currently.
(h) Auditors' Qualification:
Certain debtors have claimed ‘no dues' in their balance con rmations to the Company for the year ended 31 March 2019 since as per them, they had actually made sales to the Company or they were entitled to certain discounts. Based on such differences in balance con rmations and/or balance con rmations not received over a longer period of time and/or action taken for recovery but no results materializing, in our opinion, Trade Receivables (other than Foreign Trade Receivables) and Advances aggregating Rs.64282 lakhs, though provided for, are yet to be written o .
The Legal process has been initiated against most of the parties. The matter for recovery from the Trade Receivable is pending with the Hon'ble NCLT Chandigarh.
The Foreign Trade Receivables were supervised by the erstwhile management of the company which is not available for comments.
(i) Auditors' Qualification:
Rs. 7.86 lakhs (31.03.18: Rs. Nil) are recoverable on account of advance given/expenses from Ex-Directors, pertaining to period before CIRP.
As the aforesaid amount pertains to the directors who are not available / traceable and pertains to the period prior to commencement of CIRP. Hence, the company has made 100% provision books of accounts
(j) Auditors' Qualification:
As per settlement agreement dated 28th May, 2018, the Company sold its multiplex property in Gorakhpur for Rs. 110 lakhs (including GST of Rs. 17 lakhs). The book value of such property was Rs.865 lakhs and the sale resulted in loss of Rs. 772 lakhs. Also, the Company was to recover Rs. 60 lakhs (Net) towards security deposit, which was also w/o in Statement of Profit and Loss. For the said transaction, no valuation report was available.
The Company sold its multiplex property in Bareilly for Rs. 450 lakhs (including GST of Rs. 71 lakhs) as per settlement agreement dated 07th Aug, 2018. The book value of such property was Rs.338 lakhs and the sale resulted in profit of Rs. 41 lakhs. Amount received against the sale was Rs. 250 Lakhs and balance of Rs. 200 Lakhs is still outstanding. For the said transaction, no valuation report was available Management Reply The transaction pertains to period prior to commencement of CIRP i.e. August 21, 2018 due to lack of proper control existent then, and the same were taken care by erstwhile directors were not available for comments. However, the matter of recovery is pending with Hon'ble NCLT Chandigarh.
(k) Auditors' Qualification:
The Company has been facing issues such as investigation by SFIO, SEBI, ED and other Authorities. Also, as per lings made by the Company from time to time with stock exchanges, there have been certain regulatory non-compliances w.r.t. the Companies Act, 2013 and the Listing Obligation and Disclosure Requirements (LODR) of Stock Exchanges. Various issues being involved and the matters having not been concluded yet, the Company is in the course of evaluating the impact to the extent ascertainable. Eventually, in respect of such matters, no liability has been booked as on 31st March, 2019.
The various authorities has started investigations against the directors / promoters as well as SRS group on the basis of complaints led for fraud committed by the directors / promoters.
The company is under CIRP, since August 21, 2018. There were various pending compliances of Companies act 2013 as well as SEBI (LODR), 2015. The Company is in the process of completing these compliances. The Resolution Professional has requested the authorities to waive o these penalties.
(l) Auditors' Qualification:
Refer Note 20 regarding the required disclosures and liability for interest, if any, to Suppliers under the Micro, Small and Medium Enterprises Development Act, 2006. In this respect, sufficient information is not available with the Company.
The company had decided to shut its jewellery division and retail division of the company and hence all the employees of the company had resigned/left and currently there are no employees in both the divisions. Since there were no employees in jewellery division and retail division hence the con rmation from the vendors for disclosure under MSMED Act could not be done. the a airs of retail division and jewellery division were managed by Mr. Sunil Jindal and is not available for comment.
(m) Auditors' Qualification:
Deposit Repayment Reserve Account for the Fixed deposits at the close of the year, required under Section 73(2)c of the Companies Act, 2013 equal to 15% of the deposits maturing in the year and in the year following were found short by Rs. 1082 lakhs as on 31st March, 2019 (net of Fixed Deposit amounting to Rs.37 lakhs with bank). Auditors are unable to comment on the financial implications in respect of the same.
The Non Compliance has been existent from the period prior to commencement of Corporate Insolvency and Resolution Process. The Public Deposit Repayment and interest related provision were looked after by Mr. Anil Jindal, Director of the Company and he is not available for comments as he is under judicial custody.
Secretarial Audit Quali cations
M/s. Jatin Singal & Associates, Company Secretaries has given the Qualifications in their Secretarial Audit Report mainly related to the Board Compositions, Board Procedures, Non-Compliances of various provisions of the Companies Act, 2013 & SEBI (LODR), 2015.
There was no proper Board, Company Secretary & CFO in the Company since April, 2018. The Company is under CIRP since 21st August, 2018. From February, 2019, the Company has started doing the pending Compliances.
HOLDING AND SUBSIDIARIES
SRS Entertainment India Limited is the Wholly Owned Subsidiary of the Company.
SRS Smart Retail Limited becomes the Wholly Owned Subsidiary of the Company w.e.f. 30th June, 2017 as the Company has acquired its 100% Shareholding.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with Section 129(3) of the Companies Act, 2013 and Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the year 2018-19. A report on the performance and financial position of SRS Entertainment India Limited, subsidiary only for F.Y.2018-2019 included in the consolidated financial statement is set out herein as Annexure-II in the Form-AOC-1. The Company has taken the necessary steps for getting the Audited Financial Statements of SRS Smart Retail Limited, but could not got the Financial Statements for F.Y.2018-2019. In the F.Y.2017-2018, the SRS Smart Retail Limited has provided the unaudited financial statements and the Company has attached the same in its Consolidation of Accounts.
EXTRACT OF ANNUAL RETURN
The extract of the annual return as provided under sub-section (3) of section 92 of the Companies Act, 2013 is annexed to this report as Annexure - III.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with sub-rules (2) and (3) of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there are no employees drawing remuneration in excess of the limits set out in the said Rules.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided herein below:-
i) the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the year 2018-19:
* Dr. Anil Jindal is under Judicial Custody since 11th April, 2018. He was given remuneration of Rs.1,81,280/- for the Month of April, 2018. His tenure as Whole-Time Director was expired on 31.05.2018.
(ii) the percentage increase in remuneration of Managing Director,Whole-Time Director, CFO and Company Secretary in the financial year 2018-2019:
* Ms. Navneet Kwatra has resigned on 9th May, 2018 ** Sh. Sachin Goyal has resigned on 28th April, 2018.
Further, there was no increase in the remuneration of Non-Executive Directors by way of sitting fee for attending Board/Committee meetings for the financial year 2018-19. No profit linked commission is paid to Non-Executive Independent Directors of the Company.
(iii) the percentage increase in the median remuneration of employees during the financial year was 0%.
(iv) the number of permanent employees on the rolls of Company as on 31st March, 2019 is 334
(v) Mr. Tinku Singh, SRS Group President and Chief Strategy Officer is receiving remuneration in excess of the highest paid Director during the year:
(vi) yes, the remuneration is as per the Remuneration Policy of the Company:
VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Company has a Vigilance Mechanism/Whistle Blower Policy to deal with fraud and mismanagement, if any. The details of Vigil mechanism/Whistle Blower Policy are explained in the Corporate Governance Report and have also been posted on the website of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has Corporate Social Responsibility (CSR) Policy for your Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the recommendations of the CSR Committee.
The Company has losses in the past periods and has no amount attributable to Corporate Social Responsibility as per the Companies Act and the company is currently undergoing Corporate Insolvency and Resolution Process, Hence no expenses towards the Corporate Social Responsibility is required.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
i) Energy Conservation
With the ideology of adhering to preservation and conservation of natural resources, we continue being environmentally responsible and energy the cient. We are committed to do its bit towards protection of environment and after taking positive steps in this area, the Company is keeping up its the orts to enhance its sustainable footprint. The following initiatives have been takenin this area:
CFLs and CDMTs were replaced with low consuming LED lights at SRS Mall.
Installed Air Cooled Fluid Cooler for 1010 KVA DG set for lower fuel consumption
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) of the Companies Act, 2013, it is hereby con rmed that: -
(a) In the preparation of the annual accounts for the year ended 31st March 2019, the applicable Indian accounting standards had been followed along with proper explanation relating to material departures;
(b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of a airs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) The directors had prepared the annual accounts on a going concern basis;
(e) The directors had laid down internal financial controls to be followed by the Company for cinema division and that such internal financial controls are adequate and were operating effectively; and
(f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)
The Company is under CIRP and information pertaining to the process are available at the Company website www.srsparivar.com.
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
Your Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below:
Your Company has adopted accounting policies which are inline with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 to the extent applicable.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
During the year under review, there were no cases led pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status ofyour Company and its operations in future.
The major events:
a) The Company had led an application with National Company Law Tribunal (NCLT) for extension of time for repayment of Deposits and NCLT has passed the order on 20th October, 2016 granting extension of time to the Company for repayment of Deposits.
The NCLT has granted further extension vide its order dated 2nd February, 2017 for interest payments by 31st March, 2017 and Principal payments by 30th June, 2017 in accordance with its earlier Order dated 20th October, 2016. NCLT has issued nal Order on 20th December, 2017.
The Company has led an appeal with the National Company Law Appellant Tribunal (NCLAT), New Delhi on 18th January, 2018 against the NCLT order dated 20thDecember, 2017 and it has been withdrawn by the Company on 8th March, 2018.
b) The application led by State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”) for initiation of Corporate Insolvency Resolution Process (“CIRP”) of SRS Limited (“Corporate Debtor”) under the provisions of Insolvency and Bankruptcy Code, 2016.The application was admitted by Hon'ble NCLT, Chandigarh Bench vide Order dated 21.08.2018 (“Insolvency Commencement Date”).
The Hon'ble NCLT vide its order dated 21.08.2018, has appointed Mr. Ashok Kumar Gulla, Insolvency Professional having IBBI Registration No IBBI/IPA-003/IP-N00024/2017-2018/10174,as the Interim Resolution Professional (“IRP”). Subsequently, the IRP was appointed as Resolution Professional under the provisions of Insolvency and Bankruptcy Code, 2016.
c) Dr. Anil Jindal and Sh. Raju Bansal along with other ex-directors have been disquali ed u/s 164(2) of the Companies Act, 2013 from 30/09/2017 to 30/09/2022 by the Registrar of Companies, NCT of Delhi & Haryana.
d) The various authorities has started investigations against the directors/promoters as well as SRS Group on the basis of complaints led for fraud committed by the directors/promotors.
e) The Company has not complied with the various provisions of the Companies Act, 2013 and SEBI (LODR), 2015 since, April, 2018. Due to this reason, the Stock Exchanges has imposed penalties on the Company which are still pending.
The Company has started doing pending compliances from February, 2019 and has completed the same.
Corporate Governance Report
The report on Corporate Governance is annexed to this report for information of the Members.
MANAGEMENT'S DISCUSSION & ANALYSIS
The Management's Discussion and Analysis Report of financial condition and results of operations of the Company is given as a separate statement forming part of this Annual Report.
ACKNOWLEDGEMENT
The Company wish to express appreciation of the support and co-operation of the various stakeholders.
Note:
The Company is undergoing CIRP and the Executive Chairman is currently under Judicial custody and all other Directors has been disquali ed vide order dated February 15, 2019 under Section 164 (2) hence no Director is on board of the company therefore no director is available for signing this Report, Hence this report has been initialed by CFO, CS and RP in order to meet the compliance.
(Jyotsna Nanda)
Company Secretary
M.No.: A-29399
IBBI Reg. No.: IBBI/IPA-003/IP-N00024/2017-2018/10174