As on: May 11, 2025 10:53 AM
<dhhead-DIRECTORS' REPORT </dhhead-
(For the Financial Year 2022-23)
To,
The members,
Value Industries Limited
Pursuant to an application filed before the Hon?bie National Company Law Tribunal, Mumbai ("NCLT" / "Adjudicating Authority") under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC" / "the Code") against Value Industries Limited ("Corporate Debtor") / "the Company"), the Adjudicating Authority had admitted the application for the initiation of the corporate insolvency resolution process ("CIRP") of the Corporate Debtor vide an order dated September 5, 2018 and appointed Mr. Dushyant Dave as the insolvency resolution professional ("CIRP Commencement").
Thereafter, separate applications were filed by State Bank of India (on behalf of all the financial creditors) and Mr. Venugopal Dhoot (one of the promoters of the Videocon group) for the consolidation of the Corporate Debtor along with other group companies. The Adjudicating Authority, vide its order dated August 8, 2019, allowed State Bank of India?s application by, inter alia, (i) allowing the consolidation of the CIRP of the Corporate Debtor with that of 12 other Videocon group companies (collectively referred to as the "Corporate Debtors", "Videocon Group Entities"); and (ii) appointing Mr. Mahender Khandelwal as the insolvency resolution professional for the Videocon Group Entities.
Subsequently, the first meeting of the consolidated committee of creditors of the Corporate Debtors ("CoC") was held on September 16, 2019. At the first meeting of the CoC, the CoC approved the name of Mr. Abhijit Guhathakurta as the resolution professional for the Videocon Group Entities, including the Corporate Debtor in place of Mr. Mahender Khandelwal. Mr. Abhijit Guhathakurta?s appointment as the resolution professional of the Videocon Group Entities ("Resolution Professional", "RP") was approved by the Adjudicating Authority vide its order dated September 25, 2019. A copy of the said order of the Adjudicating Authority was made available to the Resolution Professional on September 27, 2019 when the same was uploaded on the website of the Adjudicating Authority.
On and from the date of publication of the aforesaid order, the powers of the board of directors of the Corporate Debtor stood vested in the Resolution Professional.
Thereafter, CoC had approved the resolution plan submitted by Twin Star Technologies Limited (the "Resolution Plan"), by passing the requisite resolution with 95.09% majority/voting share in accordance with the provisions of Section 30(4) of the Code. The said Resolution Plan, as approved by the CoC, had been filed with the NCLT in accordance with the Section 30(6) of the Code for its approval on December 15, 2020. Further, NCLT vide order dated June 08, 2021 ("Approval Order"), approved the resolution plan submitted by Twin Star Technologies Limited ("Approved Plan").
In terms of the Approved Plan, a steering committee had been constituted ("Steering Committee"). The Steering Committee in its meeting held on June 18, 2021 had appointed the Resolution Professional, Mr. Abhijit Guhathakurta, as the interim manager of the Corporate Debtors ("Interim Manager"), for undertaking the management and control the Company, from the date of Approval Order till the completion of the implementation process on the Closing Date (as provided under the Approved Plan).
However, pursuant to the appeals filed by three dissenting financial creditors (among others) before the Hon?bie National Company Law Appellate Tribunal, New Delhi (the "NCLAT"), the Hon?bie NCLAT, vide its order dated July 19, 2021 in the said Appeals (the "Stay Order"), inter-alia stayed the operation of the Approval Order till the next date of hearing and ordered the maintenance of status quo ante as before passing of the Approval Order. Further, as per the Stay Order, the Resolution Professional was directed to continue to manage the 13 Videocon Group Entities as per the provisions of the Code till the next date of hearing.
Later on, the NCLAT vide its final order dated January 05, 2022 set aside the Approval Order and remitted back the matter to the COC for completion of the process relating to CIRP in accordance with the provisions of the Code (the, "NCLAT Final Order"). Subsequently, pursuant to the NCLAT Final Order, the COC in their meeting held on January 12, 2022, decided to invite afresh expressions of interest for submission
However. Twin Star Technologies Limited challenged the NCLAT Final Order in Civil Appeals bearing numbers 509. 512 and 894 of 2022 before the Hon'ble Supreme Court ("SC Appeals"). The SC Appeals were listed on February 14, 2022, on which date, the Hon'ble Supreme Court made oral remark to the Resolution Professional and COC to not proceed further with the CIRP of the Corporate Debtors till any further orders in subsequent hearings. Pursuant to these oral remarks of the Hon?ble Supreme Court, the status quo is being preserved in the current CIRP of Corporate Debtors till further orders/directions of the Hon?ble Supreme Court. Therefore, the Resolution Professional continues to manage the Videocon Group Entities (including the Company), as per the provisions of the Code. As a result, the powers of board of directors of the Corporate Debtor are being exercised by the Resolution Professional in terms of provisions of Section 25 of the Code.
At the time of commencement of CIRP, there were three (3) Directors on the board of the Company, (i) Mr. Bhujang S. Kakade, (ii) Mr. Deepak A. Pednekar and (iii) Mr. Naveen B. Mandhana, collectively refeiTed to as the ‘Erstwhile Directors?.
After appointment of Mr. Abhijit Guhathakurta as the Resolution Professional of the Company, the Company started examining and effectuating applicable outstanding compliances, by collating and verifying various data of the Company. During such examination of details, the Company became aware that Mr. Deepak Pednekar had incurred disqualification u/s 164(2) of the Companies Act, 2013 (the "Companies Act"). Accordingly, the Company had filed relevant e*form DIR-12 for cessation of his directorship, for the purpose of compliance. It is being clarified that the e-forms DIR-12 was filed only for the puipose of complying with statutory requirements under the Companies Act, and he continued to be responsible for the affairs of the Company up to the date the Company recognized his disqualification/vacation and took the same on record. Further. Mr. Bhujang Kakade completed his tenure of Directorship on September 25,2021. Also, Mr. Naveen B. Mandhana, resigned from the directorship of the Company w.e.f. October 18,2022 which was placed before the CoC for its consideration. The relevant DIR-12 forms for cessation of Directorship of these two Directors could not be filed with Ministry' of Corporate Affairs ("MCA") because of the technical difficulties on the MCA portal as the number of available director?s falls below the minimum requirement of 3 directors.
The Resolution Professional with the necessary approval of the COC, had appointed Mr. Sltyam R. Lalsare as Whole-Time Director of the Company w.e.f. October 5, 2020 and other Key Managerial Personnel (Chief Financial Officer (CFO) and Company Secretaty (CS)) for the purpose of complying with statutory requirements under the Companies Act, and the Company had filed e-form DIR-12 to that effect. However, both Che CFO and CS appointed by the Resolution Professional had tendered their resignations from the Company.
It may also be noted that Mr. Shyam Lalsare has incurred disqualification under section 164(2) of the Companies Act from October 30, 2022 due to the non-filing of financial statements and annual return of the Company for the last three financial years i.e. for the financial year 2019-20, 2020-21 and 2021-22. However, in terms of the first proviso to section 167( 1 )(a) of the Companies Act he did not vacate his office in the Company. His tenure of appointment completed on 4Jl October, 2023, as such he ceased to be Whole- Time Director of the Company w.e.f. 5th October, 2023.
Thus, presently there is no Director, CFO or CS available in the Company.
However, it may also be noted that the resignation / separation of Directors has not been accepted by the RP or the CoC in terms of provisions of section 28(j) of the Code.
As it was explained in financial statements for FY 2019-20, there were several challenges faced for finalizing audited financial statements for FY-I9-20. Unless the financial statements for FY 19-20 were finalized, Financial Statements for FY 2020-21, 2021-22 and consequently 2022-23 could not be completed. Thus, this report of directors of the Company for the financial year ended March 31,2023 could not be finalised and the annual general meeting of the shareholders for adoption of the financial statements along with this report could not be convened earlier.
Pursuant to Consolidation of CIRP of Videocon Group Entities, due to limited availability of resources, the accounting and secretarial compliances of Videocon Group Entities (including the Corporate Debtor) are being collectively managed by employees, officials and consultants of Videocon Group Entities (hereinafter referred to as "Group Resources"). d
The audited statement of Profit and Loss ended March 31. 2023 and the Balance Sheet as at date together with the Cash Flow Statement and notes and annexures thereto; and the Reports of the Directors of the Company (the '‘Financial Statements") have been prepared by the Group Resources and accordingly, basis the confirmation provided by the Group Resources of the veracity and reliability of these Financial Statements, these Financial Statements have been taken on record and signed by Mr. AbhijitGuhathakuita, the resolution professional of the Company, subject to the following disclaimers:
i. The RP has assumed control of Corporate Debtor from with effect from September 27, 2019 and therefore was not in control of the operations or the management of the Corporate Debtor for the period prior to his assumption of office. On this account, RP does not have any visibility as to the matters that transpired prior to the date of his assumption of office as the RP of the Company, and is not in a position to independently verify or ascertain the matters as stated or reported in the said Financial Statements and / or accompanying documents in respect of matters prior to the date of his assumption.
ii. These Financial Statements are being furnished in good faith and accordingly, no suit, prosecution or other legal proceeding shall lie against the RP in terms of Section 233 of IBC. Further, pursuant to Regulation 39(7) of the insolvency & Bankr uptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("C1RP Regulations"), RP should be protected against any actions of the Corporate Debtor prior to assumption of his office. RP disclaims any liability whatsoever on account of signing these Financial Statements.
iii. No statement, fact, information or opinion contained herein should be construed as a representation or warranty, express or implied, of the RP including, his authorized representatives and advisors.
iv. These Financial Statements have been prepared solely on the basis of confirmations, representations and statements made by the Group Resources. The RP has assumed that all information and data as provided by Group Resources in the Financial Statements are in conformity with applicable laws with respect to the preparation of the Financial Statements, and is true and correct. Accordingly, the RP is not making any representations regarding accuracy, veracity or completeness of the data or information in the Financial Statements. In any case, considering that the said Financial Statements relate to certain matters prior to RP?s incumbency, RP is not in a position to either independently verify such matters as stated herein nor to make any representation or warranty in relation to these aspects.
v. The Group Resources and the RP (including his team) had relied on the balances reflected in available accounts 1 ledgers/ trial balance as on March 31,2019, without going into the merits of such balances outstanding. Since these matters pertain to period prior to assumption of his office, the RP is constrained to rely on these materials on as is basis, without being able to independently verify or ascertain matters in relation to the same. No adjustments have been made to such accounts / balances except for giving effect to the transactions entered subsequently from April 1,2019.
vi. These Financial Statements have been prepared and are being finalized solely for the purposes of compliance of the Company in terms of applicable law. Considering that currently there is no director and no key managerial personnel available with the Company, the RP is signing these Financial Statements merely for this limited purpose of achieving compliance status of the Company in terms of applicable law.
vii. The matters as contained in these Financial Statements (including the opening balances) continue to be subject to the look-back period as prescribed under IBC for avoidance transactions. In this regard, RP in compliance of his duties under the TBC had reported certain transactions to be declared as void and set aside by the Hon?ble Adjudicating Authority in exercise of its powers under Chapter III and Chapter IV of the IBC. Adjustments, if any, for such transaction(s) may be made upon further directions from NCLT and/or upon any order being passed by NCLT. Mere affixation of signatures by RP on these Financial Statements should not be construed as conflicting or diluting in any manner such proceedings which are lodged or may be lodged by the RP against the concerned persons for matters discovered as within the ambit of avoidance transactions under Section 43, 45, 50 & 66 the IBC.
viii. There are ongoing investigations against Videocon Group Entities by different government agencies, including Serious Fraud Investigation Office ("SFIO") and Directorate of Enforcement ("ED?"). Merely by affixation of signatures by RP on these Financial Statements, RP cannot be said to have any cognizance or knowledge of matters contained herein which pertain to period prior to assumption of his office. RP is signing these financials, fully relying in good faith upon these financials as prepunxp
by Group Resources. Accordingly, merely by affixation of signatures by RP on these financials in good faith, no proceedings can be initiated nor RP be implicated in ongoing proceedings for matters contained herein which relate to period prior to his incumbency.
ix. The Resolution Professional has filed applications with Hon?ble NCLT under section 19 of the Code seeking co-operation from promoters and erstwhile management of the Company, for providing various data, including those that are required for preparing Financial Statements and data requested by various investigating agencies. The requested data is still not made available to the Resolution Professional. Accordingly, without prejudice to matters contained hereinabove, RP could not in any event have independently verified all the infonnation contained in the Financial Statements.
The 35th (Thirty Fifth) Annual Report of the Company together with the audited statements of accounts for the year ended March 31,2023 is presented herein below:
The financial performance of the Company, for the financial year ended on March 31,2023 is summarized below:
During the year, on account of the Company being into ORP and various constraints and complexities, the operations were impacted.
The MCA vide its notification in the Official Gazette dated Februaiy 16, 2015 has issued Companies (Indian Accounting Standards) Rules, 2015. Accordingly, in compliance with the said Rules, the Financial Statements of the Company for the Financial Year 2022-23 have been prepared as per Indian Accounting Standards, subject to the necessary clarifications explained elsewhere in this report and in Notes to the Accounts.
There was no change in the nature of business of the Company during the year under review.
The Company has complied with the corporate governance requirements under the Companies Act and as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 f' SEBI (LODR)") to the extent practically possible and feasible in view of various constraints and complexities on account of the Company being into CIRP. A separate section on Corporate Governance under SEBI (LODR) along with a certificate from the Company Secretary in whole time practice confirming the compliance is marked as ‘Annexure- 1? and forms part of this Directors Report.
As the Company is admitted under CIRP. the Company do not propose to transfer any amount to the General Reserves.
The Company has not declared any dividend on Equity Shares after financial year 2009-2010. Accordingly, there was no unclaimed dividend, which was due for transfer in terms of the Investor Education and Protection Fund Authority (Accounting, Audit Transfer and Refund) Rules. 2016 (‘iEPF Rules'?).
The Company is also in the process of transferring the shares in respect of which dividend is unclaimed or unpaid for 7 consecutive years and which were due for transfer to IEPF under the provisions of Section 124 of tire Companies Act read with Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules. 2016. As at the end of financial year ended March 31, 2023, 18,72,464 equity shaves held by 17,657 equity shareholders were unclaimed. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.
During the year under review, the Company has not issued/ allotted any securities.
Your Company has not accepted any Fixed Deposit within the meaning of Chapter V of Section 73 of the Companies Act read with Companies (Acceptance of Deposits) Rules, 2014 and as such, no amount of principal or interest was outstanding as on the Balance Sheet date.
Apart from the developments in the ongoing CIRP of the Company, which has been explained before in this report, there were no other material changes and commitments affecting the financial position of the Company which occurred after the balance sheet date and as at the date of signing of this report.
The Company has not extended any new Loans, Guarantees or Investments in terms of Section 186 during the financial year. Accordingly, the disclosures pursuant to Section 134(3)(g) read with Section 186 of the Companies Act and Schedule V of the SEBI (LODR), are not applicable.
Pursuant to the provisions of Section 28 of the Code, the Company can enter into related party transactions during CIRP period only after the approval of the CoC. During the year under consideration, the RP had after his assumption of office taken requisite approvals from the CoC, wherever required, for entering into related party transactions as required under the Code.
Further, since Videocon Group Entities are under a group insolvency, for enhancement of value of the Videocon Group Entities as a whole, it was agreed in the 3 rd consolidated CoC by all CoC members that the funds of Videocon Industries Limited (VIL) should be used for meeting shortfall in the fixed costs of the other 12 companies (including the Company) under consolidated CIRP as well as for meeting operational gap for productive business activities. The members of CoC had unanimously authorized the RP to utilize funds of VIL on a need-based basis for meeting the shortfall in fixed costs of other 12 group companies (including the Company) and also for meeting any operational requirements for cariying out business / manufacturing activities in these companies with an overall objective to maintain going concern nature, ensure continued business operations and in order to maximize value of the assets of Videocon
Group Entities. However, this should not be treated as the additional fi italic ing/borrowing(s) in terms of the provisions of the Companies Act.
There ar e no other related party transactions made by the Company which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders.
The disclosure, in terms of Section I34(3)(h) of the Companies Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is not applicable.
The Policy on Related Party Transactions, as formulated prior to CIRP Commencement by the erstwhile management, is uploaded on the website of the Company at the following URL- http ://w ww .valueind.in/i mage/va lue(Value%20Rel ated%20Party %20T ransacti o n%20Po 1 icy ,pd f.
However, since the Company is undergoing consolidated CIRP with 12 other Videocon group entities, the said policy may not be relevant and applicable to the Company as on date, especially in relation to the
transactions inter se other group entities undergoing consolidated CIRP.
The Company does not have any subsidiary, joint venture or associate.
The policy on directors? appointment and remuneration, as formulated prior to CIRP Commencement by the erstwhile management sets out the criteria for directors? appointment and remuneration including the criteria for determining qualifications, positive attributes and Independence of directors. However, since the Company is into CIRP, the said policy may not be relevant and applicable to the Company as on date. Other details under this section form part of the Corporate Governance Report.
Information required pursuant to Section 197(12) of the Companies Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is marked as ‘ Annexure- V and forms part of this Directors Report.
A statement containing, inter alia, the names of top ten employees in terms of remuneration drawn and every employee employed throughout the financial year and was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees and, employees employed for any part of the year and in receipt of remuneration at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month, pursuant to Rule 5(2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is marked as ‘Annexure- 2A? and forms part of this Directors Report,
The Company continues to utilize the existing available infrastructure to conserve energy. Considering the Company is into CIRP, no fl esh investment was made on technology for energy conservation.
Since no fresh investments were made towards technology', no new benefits were derived.
The Company has not imported any technology since commencement of CIRP. Further, the Company has not incurred any expenditure (capital or recurring) on R&D and accordingly, the percentage of expenditure to the total turnover is Nil.
There are no foreign exchange earnings during the year under review and the previous year ended on March 31,2022. The foreign exchange outgo amounted to Rs. Nil for the financial year ended on March 31,2023 as against Rs. Nil in the previous financial year ended on March 31,2022.
After appointment of Mr. Abhijit Guhathakurta as the Resolution Professional of the Company, the Company started examining and effectuating applicable outstanding compliances, by collating and verifying various data of the Company. During such examination of details, the Company became aware that Mr. Deepak A. Pedneker has incurred disqualification under Section 164(2) of the Companies Act. Accordingly, the Company had filed relevant e-form DIR-12 for cessation of his directorship, for the purpose of compliance. It is being clarified that the e-form DIR-12 was fifed only for the purpose of complying with statutory requirements under the Companies Act, and he continued to be responsible for the affairs of the Company up to the date the Company recognized his d is qualification^ a cation and took the same on record. Further. Mr. Bhujang Kakade completed his tenure of Directorship on September 25, 2021, Also, Mr. Naveen B. Mandhana, resigned from the directorship of the Company w.e.f. October 18, 2022 which was placed before the CoC for its consideration. The relevant DIR-12 forms for cessation of Directorship of these two Directors could not be filed with MCA because of the technical difficulties on the MCA portal as the number of available director's falls below the minimum requirement of 3 directors.
The Resolution Professional with the necessary approval of the COC, had also appointed Mr, Shyam R. Lalsare as Whole-Time Director of the Company w.e.f. October 5,2020 for the purpose of complying with statutory requirements under the Companies Act, and the Company had filed e-form DIR-12 to that effect. The tenure of Mr. Shyam R Lais ware was extended by one more year on October 5, 2022.
It may also be noted that Mr. Shyam Lalsare had incurred disqualification under section 164(2) of the Companies Act from October 30, 2022 due to the non-filing of financial statements and annual return of the Company for the last three financial years i.e. for the financial year 2019-20. 2020-21 and 2021-22. However, in terms of the first proviso to section 167( l){a) of the Companies Act he did not vacate his office in the Company.
Mr. Shyam Ramesh Lalsare (DIN: 08901418) was first appointed as a Whole-Time Director of the Company for a period of 2 (Two) years & Occupier of the Factory of the Company (in terms of the provisions of the Factories Act, 1948) situated at 15 K.M. Stone, Aurangabad-Paithan Road, Village Chittegaon, Tal.: Paithan, Dist.: Aurangabad - 431 105, with effect from October 05, 2020 in pursuance to the approval of the Committee of Creditors of the Company at its meeting held on September 2.2020. As the Company was still undergoing the CIRP, the Company had decided to extend the tenure of his appointment as a whole-time director of the Company for a further period of one (1) year with effect from October 05,2022, on the same terms and conditions. This extension continued subject to ongoing CIRP of the Company and its outcome. However, in light of the proviso under Section 167(1) ofthe Companies Act Mr. Shyam continued to be the director ofthe Company only upto a period of I (one) year with effect from October 5, 2022 and was not eligible for re-appointment thereafter, Mr. Shyam R Lalsare ceased to be whole time director with effect from October 5, 2023 consequent to completion of his tenure.
Thus, presently there is no Director on the board ofthe Company.
Details of Key Managerial Personnel;
Ms. Anshika Arora, was appointed as Company Secretary and Compliance Office ofthe Company by the Resolution Professional (with the approval ofthe CoC) w.e.f. May 12, 2021. However, Ms. Anshika Arora resigned as Company Secretary arid Compliance Office w.e.f. July 10, 2022.
Mr. Deepak Soni had tendered his resignation as Chief Financial Officer w.e.f. September 2, 2021.
Accordingly, there is no CFO or CS available with the Company as on date.
As on the date of this report, there are no Independent Directors available with the Company. As such, for the year under consideration, the Company had not received declaration from Independent Director of the Company under Section 149 of the Companies Act and the provisions of SEBI (LODR) stating that they meet the criteria of independence as provided therein.
Since (he Company is currently into CIRP, the RP continues to take business decisions, in consultation with the CoC and officials of Videocon Group Entities, wherever required, to mitigate risks if any.
The Company also has in piace a Risk Management Committee / Risk Management Policy, as was formulated prior to CIRP Commencement. However, since the Company is into CIRP, the said policy may not be relevant and applicable to the Company as on date. Other details related to this section form part of the Corporate Governance Report.
As the net profits for the three immediately preceding financial years were negative, the Company was not required to make any CSR expenditure during Financial Year 2022-2023.
Other details related to this section form part of the Corporate Governance Report.
The Company lias taken adequate measures towards health & safety of the employees. In line with the SEBFs directives, the Company has also made necessary disclosure with the stock exchange(s) on impact of the Covid-I9 pandemic inter-alia including health and safety measures and the said disclosure is accessible on the website of the Company and the stock exchanges.
The Company continued the practices formulated prior to the commencement of CIRP for the environment protection, wherever possible.
The Company continues to optimally utilize the available Information Technology infrastructure, to the extent practical and possible.
During the year under review, there were no complaints filed / pending witli the Company with respect to sexual harassment.
As on the date of this report, there are no Independent Directors available with the Company. Further, in terms of the requirements of the Code, all eligible directors of the Company are invited to the meetings of the CoC to enable them be aware of all the significant events/changes in relation to the Company.
Directors
At the time of commencement of CIRP, there were three (3) Directors on the board of the Company, (i) Mr. Bhujang S. Kakade (DIN: 06383819), (ii) Mr. Deepak A. Pednekar (DIN: 07639771) and (iii) Mr. Naveen B. Mandhana (DIN: 01222013), collectively referred to as the 'Erstwhile Directors?. The number of companies in which they hold the memberships/ chairmanships of Board Committees, as stipulated under SEBI (LODR) is provided in the Corporate Governance Section of this Annual Report. _
During the financial period under review, no Meeting of the Directors was held.
The following committees were constituted prior to CIRP Commencement, by the erstwhile management, pursuant to the provisions of the Companies Act and provisions of the SEBI (LODR):
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders? Relationship Committee (Administrative and Shareholders / Investors Grievance Committee)
4. Corporate Social Responsibility Committee
5. Risk Management Committee
6. Finance and General Affairs Committee
The composition, scope and powers of the aforementioned committees together with details of meetings held during the period under review, forms part of Corporate Governance Report.
It may be noted that since the Company is into CIRP, the powers of board of directors (and its committees) stand suspended and are to be exercised by the insolvency professional.
Consequent to commencement of CIRP, the formal annual performance evaluation was not carried out.
The Company has in place a Whistle Blower Policy, as formulated prior to CIRP Commencement by the erstwhile management. During the year under review, the Company has not received any complaints under the Vigil mechanism. The Whistle Blower Policy of the Company has been displayed on the Company?s website at the link:http://www.valueind.in/image/value/value%vigi)%20mechanism%.pdf
The equity shares of your Company are listed on the BSE Limited (Formerly: The Bombay Stock Exchange Limited) and The National Stock Exchange of India Limited (NSE).
Due to non-compliance with certain provisions of the SEBI (LODR) by the erstwhile management and the Standard Operating Procedure for suspension and revocation of trading of specified securities, the shares of the Company are suspended from trading on National Stock Exchange Limited and BSE Limited w.e.f. March 28, 2018 and October 8, 2018 respectively.
In June 2021, pursuant to the NCLT Approval Order, and in terms ofthe Approved Plan, the Company had applied for de-listing of equity shares from both the aforesaid stock exchanges. However, these delisting applications remain pending before the stock exchanges, pending the outcome ofthe SC Appeals.
The Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34{2)(e) ofthe SEBI (LODR) is marked as ‘Annexure- 3? and forms part of this Directors Report.
The Cash Flow Statement for the year ended March 31, 2023, in conformity with the provisions of the Companies Act and SEBI (LODR) is annexed hereto.
1. STATUTORY AUDITORS:
The erstwhile statutory auditors of the Company, M/s S. Z. Deshmukh & Co., Chartered Accountants Mumbai had tendered their resignation dated October 8, 2021 (received by the Resolution Professional ot October 11,2021) w.e.f. financial year commencing front April 1,2019.
In terms of section 17 of the Code, any change in the terms of appointment of the statutory auditor require; approval of the Committee of Creditors. Accordingly, basis the written consent and certificate submittec by M/s KVA and Co., Chartered Accountants (Firm Registration No. 017771C), in terms of the provision; of section 139 (1) of the Companies Act read with Rule 4 the Companies (Audit and Auditors) Rules, 2014 the CoC, at its meeting held on June 8, 2022 and vide voting concluded on June 17, 2022, had approver appointment ofM/s KVA and Co. as the Statutory Auditors of the Company for the period of five (5) year; from the financial year April 1,2019 to March 31,2024.
Thus, in terms of the provisions of Section 139 of the Companies Act and the Rules made thereunder, M/; KVA & Company, Chartered Accountant (Firm Reg. No: 017771C) shall hold office till the conclusion oi 36th AGM to be held for financial year 2023-2024.
2. STATUTORY AUDIT REPORT:
M/s KVA & Company, Chartered Accountant (Firm Reg. No: 017771C), the Statutory' Auditors of the Company have submitted Auditors Report, which has qualifications, disclaimers and observations on the financial statements, compliance with other Legal & Regulatory Requirements and adequacy and effectiveness of Internal Financial Controls, for the financial year ended on March 31,2023.
Auditors Qualification:
The qualifications, disclaimers and observations raised by the Statutory Auditors in their report for the period ended on March 31,2023 is are set out and marked as ‘Annexure 4?.
In response to the qualifications /observations raised by the Statutory Auditor, the Resolution Professional re-iterates that in the absence of any Erstwhile Directors or key managerial personnel who was part of the erstwhile management as on date, the Resolution Professional has relied on the coufinnations provided by the Group Resources who have prepared the Financial Statements of the Company basis the available data. Further, as explained in the notes to accounts of the Financial Statements:
a) as it was explained in Financial Statements for FY 19-20, the Group Resources and the RP (including his team) had relied on the opening Balance Sheet and the balances reflected in available accounts / ledgers/ trial balance as on March 31, 2019, without going into the merits of such balances outstanding. No adjustments have been made to such accounts / balances except for giving effect to the transactions entered subsequently from April 1,2019.
b) since the Company is under CIRP and various Prospective Resolution Applicants ("PRAs") were conducting their independent due-diligence for submitting a resolution plan, it was material to ensure that any change in books of the Corporate Debtor on account of revaluation of assets, impairment assessment, ascertainment of Fair Market Value of assets etc. does not provide any indicative pricing on the assets of the Corporate Debtor to the PRAs. Thus, in the interest of value maximization under CIRP for all stakeholders, certain assets like property plant and equipment, unquoted investments, loan & advances, inventories etc. have been recorded at their carrying values. Also, no additional provision has been made on outstanding receivables.
c) an independent Transaction Review Audit was conducted as required under section 43-66 of IBC
for identification of Preferential, Undervalued, Extortionate, and Fraudulent transactions as defined and explained under IBC. The resultant observations from the Audit had indicated that there may be certain questionable accounting entries and/or transactions entered into before commencement of CIRP. In this regard, RP in compliance of his duties under the IBC has filed an application with NCLT to declare such transactions as void and be set aside. Adjustments, if any, for such transaction(s) may be made upon further directions from NCLT and/or upon any order being passed by NCLT. if
d) there are ongoing investigations against Videocon Group Entities by different government agencies. The Resolution Professional has been fully supportive and cooperative in the investigation being carried out by the statutory investigative agencies, including SFIO and Directorate of Enforcement.
e) the Resolution Professional has filed applications with Hon'ble NCLT under section 19 of the Code seeking co-operation from promoters and erstwhile management of the Company, for providing various data, including those that are required for preparing Financial Statements and data requested by various investigating agencies. The requested data is still not made available to the Resolution Professional. Thus, in the absence of required relevant data, the Financial Statements have been prepared on the basis of available data on best effort basis.
f) In light of the aforesaid reasons, confiimations and reconciliation of balances of certain trade receivables, trade and other payables and loans and advances could also not be obtained.
g) Post assumption of office of the Resolution Professional, all payments are being approved only by the Resolution Professional (with requisite approval from the CoC, wherever required as per applicable provisions of the Code). The Company has established effective controls for monitoring CIRP period transactions undertaken post assumption of office of the Resolution Professional.
h) Considering the Company is required to be run as a going concern under CTRP. the Financial Statements have been prepared on going concern basis.
Thus, owing to various financial and operational constraints including but not limited to non-cooperation from Erstwhile Directors/ management and promoters of the Company, non-availability of detailed books of accounts and various supporting documents and records for pre-CIRP period, resignation of past employees / consultants from accounts function, the preparation of Financial Statements of the Company has faced several limitations. The RP had taken necessary steps under the Code to seek the requisite data and had further filed application under Section 19 of the Code seeking requisite cooperation and data from promoters and Erstwhile Directors/ management of the Company, and the requisite data has still not been made available, and the proceedings before the Hon?ble NCLT against the Erstwhile Directors / management of the Company for seeking the necessary information and cooperation remains sub-judice.
3. COST AUDITOR AND COST AUDIT REPORT:
Considering the cuirent status of CIRP, extent of operations and various financial and operational constraints, the Company is evaluating the requirement and feasibility of conducting Cost Audits from FY 2019-20 and is in process of approaching the MCA in this regard..
4. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:
Section 204 ofthe Companies Act inter-alia requires every listed company to annex to its Board's Report, a secretarial audit report given by a Company Secretary in practice, in the prescribed form.
The Resolution Professional, in compliance with Section 204 of the Companies Act had, based on the recommendations of the secretarial team of Videocon Group Entities, appointed Mrs. Gayathri R. Girish, Company Secretary in Whole-Time Practice, Pune (Membership No. 18630. C.P. No. 9255) to carry out the Secretarial Audit for the financial period ended on March 31,2023. The Report of the Secretariat Audit in Form MR-3 for the financial year ended March 31,2023 is marked as 'Annexure- 5? and forms part of this Report and consists of the observations stated by the Secretarial Auditor.
In respect of observations raised by the Secretarial Auditor, the following explanations are being placed on record:
- The Company is no! having variousfinancial, secretarial and cost records for periods up to CIRP Commencement as the same were not handed over by the promoters / erstwhile management to the Resolution Professional. The Resolution Professional has already filed applications with Hon ?ble NCLT under section 19 ofthe Code seeking co-operation from promoters and erstwhile management of the Company, for providing various data, including secretarial records of t Company. (l&j
- Further, there were pre-existing delays in compliances during the period prior to commencement of CIRP and/or prior to assumption of office of the Resolution Professional Such past delays / non-compliances also had an impact on the compliances falling due during tenure of the Resolution Professional.
- Post assumption of office of the Resolution Professional, despite several operational, practical and technical challenges faced, the Company has endeavored to comply with secretarial compliances of the Company, to the extent feasible and possible, including those pertaining to period prior to his assumption of office.
- The Company had a continued default in filing of quarterly results from quarter ended March 31, 2018. as required to be filed under Regulation 33 of SEBI (LODR) In the absence of pre- C1RP data and non-availability of comparative figures of previous years, the Company has been unable to submit the quarterly filing disclosures to the stock exchanges within the due dales
There is no fraud/misconduct detected at the time of statutory audit by the Auditors of the Company for the financial year ended on March 31,2023.
Post assumption of office of the Resolution Professional, all payments are being approved only by the Resolution Professional (with requisite approval from the CoC, wherever required as per applicable provisions of the Code). The Company has established effective controls for monitoring CIRP period transactions.
The copy of the Annual Return in e-Form MGT 7 pursuant to the provisions of Section 92(3) of the Companies Act and the Rules made thereunder has been displayed on the Company?s website at the link: http://www.valueind.in/relationserviee.aspx7SeNOthers
Except for orders in connection with CIRP under the Code, no material orders were passed by Regulators/ Courts / Tribunals during the period impacting the going concern status and Company's operations in future.
As explained before, presently there is no Erstwhile Director or key managerial personnel who was part of the erstwhile management, available with the Company as on date. Pursuant to Consolidation of CIRP of Videocon Group Entities, due to limited availability of resources, the accounting and secretarial compliances of Videocon Group Entities (including the Corporate Debtor) are being collectively managed by the Group Resources.
The Financial Statements of the Company have been prepared by the Group Resources and accordingly, basis the confirmations provided by the Group Resources of the veracity' and reliability of these Financial Statements, the Financial Statements have been taken on record and signed by Mr. Abhijit Gubathakurta, the resolution professional of the Company, subject to the following disclaimers:
i. The RP has assumed control of Corporate Debtor from with effect from September 27, 2019 and therefore was not in control of the operations or the management of the Corporate Debtor for the period prior to his assumption of office. On this account, RP does not have any visibility as to the matters that transpired prior to the date of his assumption of office as the RP of the Company, and- is not in a position to independently verify or ascertain the matters as stated or reported in the strfji
Financial Statements and/ or accompanying documents in respect of matters prior to the date of his assumption;
ii. These Financial Statements are being furnished in good faith and accordingly, no suit, prosecution or other legal proceeding shall lie against the RP in terms of Section 233 of IBC. Further, pursuant to Regulation 39(7) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), RP should be protected against any actions of the Corporate Debtor prior to assumption of his office. RP disclaims any liability whatsoever on account of signing these Financial Statements;
iii. No statement, fact, information or opinion contained herein should be construed as a representation or warranty, express or implied, of the RP including, his authorized representatives and advisors;
iv. These Financial Statements have been prepared solely on the basis of confirmations, representations and statements made by the Group Resources. The RP has assumed that all information and data as provided by Group Resources in the Financial Statements are in conformity with applicable laws with respect to the preparation of the Financial Statements, and is true and coirect. Accordingly, the RP is not making any representations regarding accuracy, veracity or completeness of the data or information in the Financial Statements. In any case, considering that the said Financial Statements relate to certain matters prior to RP?s incumbency, RP is not in a position to either independently verify such matters as stated herein nor to make any representation or warranty in relation to these aspects.
v. As it was explained in financial statements for FY 19-20, the Group Resources and the RP (including his team) have relied on the opening Balance Sheet and the balances of available accounts / ledgers / trial balance as on March 3t, 2019, without going into the merits of such balances outstanding. Since these matters pertain to period prior to assumption of his office, the RP is constrained to rely on these materials on as is basis, without being able to independently verify or ascertain matters in relation to the same. No adjustments have been made to such accounts / balances except for giving effect to the transactions entered subsequently from April 1,2019.
vi. These Financial Statements have been prepared and are being finalized solely for the putposes of compliance of the Company in terms of applicable law. Considering that currently there is no director and no key managerial personnel available in the Company, the RP is signing the Financial Statements (including this directors? report) merely for this limited purpose of achieving compliance status of the Company in terms of applicable law.
vii. The matters as contained in the Financial Statements (including the opening balances) continue to be subject to the look-back period as prescribed under IBC for avoidance transactions. In this regard, RP in compliance of his duties under the IBC had reported certain transactions to be declared as void and set aside by the Hon'ble Adjudicating Authority in exercise of its powers under Chapter III and Chapter IV of the IBC. Adjustments, if any, for such transaction(s) may be made to the Financial Statements upon further directions from NCLT and/or upon any order being passed by NCLT. Mere affixation of signatures by RP on these Financial Statements should not be construed as conflicting or diluting in any manner such proceedings which are lodged or may be lodged by the RP against the concerned persons for matters discovered as within the ambit of avoidance transactions under Section 43, 45, 50 & 66 of the IBC.
viii. There are ongoing investigations against Videocon Group Entities by different government agencies, including SFIO and ED. Merely by affixation of signatures by RP on these Financial Statements, RP cannot be said to have any cognizance or knowledge of matters contained herein that pertain to the period prior to assumption of his office. RP is signing these financials, fully relying in good faith upon these financials as prepared by Group Resources. Accordingly, merely by affixation of signatures by RP on these financials in good faith, no proceedings can be initiated nor RP be Implicated in ongoing proceedings for matters contained herein which relate to period prior to his incumbency.
ix. The Resolution Professional has filed applications with Hon?ble NCLT under section 19 of the Code seeking co-operation from promotel's and erstwhile management of the Company, for providing various data, including those that are required for preparing Financial Statements and data requested ' by various investigating agencies. The requested data is still not made available to be Resolpfrod Professional. Accordingly, without prejudice to matters contained hereinabove. RP could not in any event have independently verified all the information contained in the Financial Statements.