(M) Provisions, Contingent Liabilities and Contingent Assets :
Provisions are recognised only when there is a present obligation as a result of past event and when a reliable estimate of the amount
of the obligation can be made. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made. Contingent Assets are not recognised in the financial statements.
(N) Use of Estimates
The preparation of the financial statements requires the Management to make estimates and assumptions considered in the reported
amounts of Assets and Liabilities (including Contingent Liabilities) as of the date of the financial statements and the reported income
and expenses during the reported period. The Management believes that the estimates used in the preparation of the financial
statements are prudent and reasonable. Future results could, however, differ from these estimates. Difference between the actual
results and estimates are recognised in the period in which the results are known/ materialised
(O) Government grants
Government grants are recognised:
(a) where there is reasonable assurance that the company will comply with the conditions attached to them and
(b) where such benefits have been earned by the company and ultimate collection is reasonably certain.
(P) Leases
Operating lease
Payments are recognised as expenditure in the Statement of Profit and Loss on a straight-line basis over the lease term
Finance Lease
The lower of the fair value of the assets and present value of the minimum lease rentals is capitalised as Fixed Assets with corresponding
amount disclosed as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest
component is charged to Profit and Loss Statement
(Q) Corporate Insolvency Resolution Process
Matter Listed With NCLT
An application was filed for the initiation of Corporate Insolvency Resolution Process ("CIRP") under Section 9 of the Insolvency and
Bankruptcy Code, 2016 ("IBC") against Innovative Tyres & Tubes Limited ("the Company") before the Hon'ble National Company Law
Tribunal, Ahmedabad Bench ("NCLT"), with a prayer to commence the CIRP. The Hon'ble NCLT vide its order dated 28th March 2022
admitted the said application for initiation of CIRP against the Company. Further, the Hon'ble NCLT gave orders for the appointment
of Mr. Abhishek Nagori as the Interim Resolution Professional ("IRP") to perform all the functions as per the IBC and that the
management of the Company shall vest in the IRP. The NCLT order also provided for a moratorium with effect from 28th March 2022
till the completion of the CIRP under the IBC, or until the Hon'ble NCLT approves the resolution plan or passes an order for liquidation
of the company, whichever is earlier. Further, In the ongoing CIRP of the Corporate Debtor, the Resolution Professional (RP) with
the approval of Committee of Creditors (CoC) re-invited the Expression of Interest (EOI) in Form G on 31.10.2022 from the Potential
Resolution Applicants (PRAs) to submit the Resolution Plan. Thereafter, the RP has received Resolution Plans from the Resolution
Applicants. Subsequently, the CoC has approved the Resolution Plan submitted by Resolution Applicant in the 12th meeting held on
31.12.2022 and the said Resolution Plan has also been submitted to the honourable NCLT for approval. The order of the honourable
NCLT for approval of Resolution Plan is awaited.
! CAPITAL & OTHER COMMITMENT
Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) ' NIL (Previous year
for ' NIL).
i CONTINGENT LIABILITIES:
Under the CIRP there are various claims submitted by the operational creditors, the financial creditors, employees and other creditors. The
overall obligations and liabilities on account of claims by the creditors shall be determined during the CIRP and accounting impact if any
will be given on completion of CIRP. During the CIRP, the Claims amounting to '13,216 lacs from Creditors were received upto 11st October,
2022. Out of total claims of ' 13,216 lacs , ' 13,121 lacs has been accepted as of 11st October, 2022 comprising '3,915 lacs as Secured and
'9,206 lacs as Unsecured. The final amount of liability will depend on outcome of Corporate Insolvency Resolution Process.
i DEFINED BENEFIT PLANS / COMPENSATED ABSENCES -
In view of NCLT Order dated 28-03-2022 for CIRP, all employees have been terminated from their service contracts and liabilities towards
gratuity and leave encashment became due on the cut off date. Therefore, the Company has booked liability for payment of Gratuity and
Leave Encashment due to the employees.
7 DISCLOSURE AS REQUIRED BY THE ACCOUNTING STANDARD - AS-18 RELATING TO “RELATED PARTIES DISCLOSURE" ISSUED BY
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ARE AS FOLLOWS:
Name of related parties and description of relationship:
Key Management Personnel and Relatives of KMP :
Mr. Mukesh G Desai Non Executive Chairman
Mr.Keyoor Bakshi Independent Director (upto 31-05-2023)
Ms.Kalpana Joshipura Independent Director
Mr. Arvind Tambi CFO & CS (upto 30-11-2022)
Mr. Abhishek Nagori Resolution Professional
Related Parties:
Associate Companies:
Halol Industries Environment & Infrastructure Limited
Other Related Parties:
Future Tyres Private Limited
Gaia Batteries Private Limited
Other
Mr. Abhishek Nagori Resolution Professional appointed by National Company Law Tribunal.
1 Current assets significantly reduced because of operating losses during the year.
2 Debt Equity ratio negatively impacted because of reduction in Shareholder fund (due to net losses).
3 Debt Service Coverage Ratio, Return on Equity Ratio, Net Profit ratio and Return on Capital employed negatively impacted mainly due
to huge loss in current year.
4 Inventory turnover ratio decreased due to decrease in net sales.
5 Trade Receivables turnover Ratio decreased due to decrease in net sales.
6 Trade Payable turnover Ratio decreased due to decrease in purchases.
7 Working Capital has eroded significantly due to operating losses in current year. Hence Net Capital turnover ratio deteroriated.
8 Return on Investment decreased due to huge loss in current year.
13 CORPORATE SOCIAL RESPONSIBILITY:
The Company is consistantly incurring losses. In accordance with section 135 of the Companies Act, 2013 the Company is not required to
spend expenditure under the Corporate Social Responsibality.
14 To the best of our knowledge and information available to us, the company has not entered any transaction with companies struck off
under section 248 of Companies Act 2013 or Section 560 of Companies Act 1956.
15 Quarterly statements of current assets filed by the company with banks or financial institutions are not in agreement with the books of
accounts.
16 The Audited financial statement of the Company for the year ended 31st March, 2023 have been taken on record by the Resolution
Professional ("RP") of the Company, Mr. Abhishek Nagori, who is appointed by the Committee of Creditors ("CoC") pursuant to the order
passed by the Hon'ble National Company Law Tribunal ("NCLT"), while discharging the powers of the Board of Directors of the Company
which were conferred upon him in accordance with the order dated 28th March 2022. It is also incumbent upon the RP, under Section
20 of the IBC, to manage the operations of the Company as a going concern. The Audited Financial Statement of the Company for the
year ended 31st March 2023 has been approved in the meeting of Resolution Professional and directors. As a part of the CIRP, the RP has
appointed a Forensic Auditor for the Company with the approval of Committee of Creditors of the Company. The Forensic Audit Report
has been received from the Forensic Auditor and as informed by the RP to the Stock exchange, no transactions have been identified in
the Forensic Audit Report in the Forensic Audit Report as Preferential, Undervalued, Fraudulent, and Extortionate (PUFE) transactions.
Since the RP has taken charge of the Company on 28 March, 2022, the RP is not liable or responsible for any actions and has no personal
knowledge of any such actions of the Company prior to his appointment and has relied on the position of the financial Statement of the
Company as they existed on 28 March, 2022. Regarding the information pertaining to the period prior to 28 March, 2022, the RP has relied
upon the explanation, clarifications, certifications, representations and statements made by the existing officials of the Company, who
were also part of the Company prior to the appointment of the RP. Similarly, after RP has been appointed, the suspended board is not
responsible for any actions taken by the RP and reflected in the financial Statement either as a transaction during the year or reflected as
carry forward of balances of the transactions undertaken during his tenure.
17 The Company's loan accounts have been classified as Non-Performing Asset (NPA) by the lenders. The Company has not made any
provision for interest which has not been charged (including unrealised interest) by the Bank on account of NPA on Bank Borrowings and
accordingly the loss & finance cost for the year ended 31st March, 2023 are understated and not quantifiable.
18 The Company has incurred net loss (after tax) of ' 5293.65 lacs during the year ended 31st March, 2023 and have accumulated losses of '
6221.30 lacs as on 31st March, 2023. The net worth of the Company has been eroded and the financial performance of the Company had
deteriorated substantially, and all the manufacturing operations have been stand still. Also, the Company continues to deal with a range
of uncertainties and is presently not able to service its debts. The Company has assessed that the use of going concern assumption is
appropriate in the circumstances and hence, these financial results has been prepared on a going concern assumption basis as per below:
i) The IBC requires the RP to, among many other things, run the Company as a going concern during CIRP.
ii) The RP, in consultation with the Committee of Creditors of the Company, in accordance with the IBC, is making all endeavours to run
the Company as a going concern.
iii) The RP has received Resolution Plans from the Resolution Applicants. Subsequently, the CoC has approved the Resolution Plan
submitted by Resolution Applicant in the 12th meeting held on 31.12.2022 and the said Resolution Plan has also been submitted to
the honourable NCLT for approval. The order of the honourable NCLT for approval of Resolution Plan is awaited.
19 During the year, there is no manufacturing activity carried out by the Company. All the Property, Plant and Equipment were unused and
were locked stock in barrels much before NCLT Order dated 28th March 2022. The Technical Usable viability is difficult to determine during
CIRP process. Further based on the possible outcome of CIRP, following the resolution process, the management has realised the need to
impair the value of Property, Plant and Equipment by taking the basis of independent valuation. During the year, the Impairment loss of '
4922.45 Lacs is booked for Property, Plant and Equipment for detailed disclosure refer Note J.
20 The Company is engaged in the business of Tyre & Tubes and therefore, there is only one reportable segment in accordance with the
Accounting Standard on Segment Reporting (AS-17).
21 In the Opinion of the Board, the Current Assets / Non Current Assets, Loans & Advances and Loans & Liabilities are shown on Historical Cost
but the realisation is subject to the final directions from the Honorable NCLT on approved resolution plan.
22 Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification /
disclosure.
As per our Report of even date For and on behalf of the Company
For Haribhakti & Co. LLP
Chartered Accountants Director Resolution Professional
F R Na 103523W/W100048 (Mukesh G Desai) (Abhishek Nagori)
DIN No.00089598
Yash Bhatt
Partner
M. No. 117745
Date : 6th July, 2023
|