As on: Apr 28, 2024 10:22 PM
To,
The Members,
CLC Industries Limited
(formerly known as Spentex Industries Limited)
Your Company's Directors are pleased to present the 31st Annual Report (1st Annual report after Corporate Insolvency Resolution Process ("CIRP")) of the Company, along with the Audited Financial Statements prepared by the Resolution Professional under the CIRP for the financial year ended on 31st March 2023.
FINANCIAL SUMMARY
(Rs. in Lakhs)
OPERATIONS
There were no business operations during the year under review as the Company was under Corporate Insolvency Resolution Process ("CIRP"). The turnover of the Company for the financial year 2022-23 was Nil. The net loss after tax stood at Rs. 1,094.41 lakhs as against Rs. 1,145.85 lakhs over last year.
SEGMENT-WISE RESULTS
The segment reporting is provided at note no. 38 of the audited financial statements.
TRANSFER TO RESERVES
The Board do not propose any transfer to reserves.
DIVIDEND
The Board of Directors does not recommend dividend for the financial year ended on 31st March, 2023 in view of loss suffered by
the company for the year under consideration.
SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY
The Company has made a provision on the investment made in Amit Spinning Industries Limited (ASIL), a subsidiary company.
Further, the investment in another subsidiary, namely Spentex Netherlands B.V. shall be transferred to erstwhile promoters of the Company in accordance with the relevant terms of the Resolution Plan approved by the Hon'ble National Company Law Tribunal vide date 12th May, 2023.
Apart from the above, the Company does not have any other subsidiaries / joint venture / associate company as on March 31st, 2023.
In view of the above, the disclosure in form AOC-1 shall not be applicable to the Company for the financial year 2022-23.
MATERIAL CHANGES AND COMMITMENT
The Company was under Corporate Insolvency Resolution Process ("CIRP") Also, the CIRP of the Company as per the provisions of the Insolvency and Bankruptcy Code, 2016 ("IBC, 2016") and it was initiated by Edelweiss Asset Reconstruction Limited (EARCL) a Financial Creditor of the Company. The Financial Creditor's petition to initiate the CIR Process was admitted by the Hon'ble National Company Law Tribunal ("NCLT"), Principal Bench, New Delhi by vide Order dated January 3, 2020.
In accordance with Section 30(6) of the IBC, the Resolution Plan submitted by Manjeet Cotton Private Limited & Vitthal Corporation Limited ("Resolution Applicants") as approved by the Committee of Creditors with the requisite majority as per Section 30(4) of the IBC, was filed with Hon'ble NCLT, Principal Bench, New Delhi and The Hon'ble NCLT, Principal Bench, New Delhi, vide its order dated May 12th, 2023, approved the Resolution Plan submitted by the Resolution Applicants. Resolution Applicants are in the process of regularising the compliances of Company.
ANNUAL RETURN
A copy of Annual Return as provided under section 92(3) and section 134(3)(a) of the Companies Act, 2013 (‘the Act') in form MGT-7 is made available on the website of the Company and can be accessed at www.spentex.net.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Subhash Kumar Kundra, Resolution Professional was responsible for the day-to-day work of the Company during the tenure of the Corporate Insolvency Resolution Process. As per Resolution Plan, on the NCLT Approval Date i.e. May 12th, 2023, all the existing directors i.e. Mukund Choudhary, Managing Director, Kapil Choudhary, Deputy Managing Director, Ms. Honey Deep Kaur, Independent Woman Director and Mohd. Asim, Independent Director of the Company, without any further action being required on the part of any Person, shall deemed to have resigned from the Board of Directors of the Company.
The Hon'ble NCLT, Principal Bench, New Delhi, vide its order dated May 12, 2023, approved the Resolution Plan submitted by the Resolution Applicants i.e. Manjeet Cotton Private Limited & Vitthal Corporation Limited and on July 12, 2023 and on August 31, 2023, the Implementation and Monitoring Committee appointed following Directors for constituting a Board of Directors of the Company. The resolution for regularization of the appointed directors shall be placed before the ensuing Annual General Meeting of the Company.
The newly constituted Board of Directors as referred above at their first meeting held on October 9, 2023 have appointed Mr. Bhupendra Singh Rajpal as Chairman and Whole-time Director of the Company for the period of 5 years and Mr. Sanchit Bhupendra Singh Rajpal appointed as Managing Director of the Company for the period of 5 years, subject to approval of the members of the Company at the ensuing Annual General Meeting.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Board of Directors at their meeting held on October 9, 2023 has constituted the Nomination and Remuneration Committee and also adopted the remuneration policy under Companies Act, 2013 and other applicable laws and it will be disclosed on the website of the Company www.spentex.net.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS:
The Company was undergoing Corporate Insolvency Resolution Process ("CIRP") in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 read with the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016. Upon approval of the Resolution plan pursuant to CIRP, new Board of Directors was formed.
DECLARATION BY INDEPENDENT DIRECTORS
Necessary declarations have been obtained from all the Independent Directors that they meet the criteria of independence under Section 149(6) of the Companies Act, 2013 ("the Act") and under Regulation 25 read with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). In terms of Regulation 25(8) of the Listing Regulations, Independent Directors have confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective of independent judgement and without any external influence. The Board of Directors have taken on record the declaration and confirmation submitted by the Independent Directors and is of the opinion that they fulfil the conditions specified in the Act & Listing Regulations and are independent of the management.
Your Company's Board is of the opinion that the Independent Directors possess requisite qualifications, experience and expertise in Corporate Governance, Legal & Compliance, Financial Literacy, General Management, Human Resource Development, Industry Knowledge, Technology, digitization & innovation.
TERMS AND CONDITIONS OF APPOINTMENT
The terms and conditions of appointment Independent Director stipulates the manner of appointment, role & functions, duties, relevant provisions of section 149, 150 and 152 of the Act and ‘Guidelines for Professional Conduct' pursuant to Schedule IV to the Act and are forming part of appointment letter.
COMMITTEES OF THE BOARD OF DIRECTORS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, there were no committees of the former Board of Directors which were functional.
The various applicable committees of the newly formed Board of Directors are constituted in accordance with the applicable laws at their meeting held on October 9, 2023.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, there were no Independent Directors in the Company and no such program was conducted during CIRP process.
NUMBER OF MEETINGS OF THE BOARD
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, no meetings of the former Board of Directors were held during financial year.
SECRETARIAL STANDARDS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, and hence no meeting of the Board of Directors or the shareholders were held during CIRP period and therefore compliance with secretarial standards would not applicable during the reporting period.
PARTICULARS OF LOANS, GUARANTEE, SECURITY AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in note no. 3 and 11 of the financial statements.
RISK MANAGEMENT
The newly appointed Board of Directors at their meeting held on October 9, 2023 has adopted the Risk Management Policy for the Company. The Audit Committee shall review the status of key risks and steps to be taken by the Company to mitigate such risks at regular intervals.
RELATED PARTY TRANSACTIONS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, the compliance with the related party transactions were dealt by the Resolution Professional in accordance with the mechanism of IBC. The details of related party transactions are disclosed in note. No. 39 of the financial statements.
WHISTLE BLOWER MECHANISM / VIGIL MECHANISM
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, and the Board of Directors unable to comment regarding complaints received from any whistleblower during the period under review.
The Board of directors of the Company at their meeting held on October 9, 2023 approved and adopted the Whistle Blower Policy and same is available on the website of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company was under CIRP process during the year under review. The Company during the implementation of Resolution Plan has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to women (including outsiders) at the workplace and for prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.
The Company is in the process of constitution of an Internal Complaints Committee to consider and to redress complaints of sexual harassment.
The Company has not received any complaint of sexual harassment during the year under review.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company was under CIRP during the financial year 2022-23 and the provisions of Corporate Social Responsibility were not applicable to the Company as the company does not fall under any of the threshold limits given in Section 135 of the Companies Act, 2013.
PARTICULARS OF EMPLOYEES
Since, the Company was under CIRP and the affairs of the Company were managed by the Resolution Professional and since the Company has paid remuneration of Rs. 4.97 lakhs during the year, the disclosure under section 197 of the Companies Act, 2013 and rules made thereunder not attracted for the financial year 2022-23.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company based on the financials received from the Resolution Professional confirms that:
have been followed and that no material departures have been made from the same;
PUBLIC DEPOSITS
Since the Company was under Corporate Insolvency Resolution Process ("CIRP") during the financial year 2022-23, it has not
accepted any deposits covered under Chapter V of the Companies Act, 2013. However, there is an outstanding amount of Rs.
479.48 lakhs received from Committee of Creditors under CIRP.
LISTING
Your Company's shares were listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE), however trading was suspended on account of Corporate Insolvency Resolution Process during the year under review.
CASH FLOW ANALYSIS
In conformity with the provisions of Regulation 34(2) of SEBI (LODR) Regulations, the Cash Flow Statement for the year ended 31st March, 2023 is enclosed as a part of this Annual Report.
AUDIT COMMITTEE
During the year under review, since the affairs of the Company was managed by the Resolution Professional under the provisions of Insolvency and Bankruptcy Code, 2016, no audit committee was functional. The Board of Directors of the Company constituted upon approval of the Resolution Plan at their meeting held on October 9, 2023 formed an Audit Committee in accordance with the applicable laws.
STAKEHOLDERS RELATIONSHIP COMMITTEE
During the year under review, since the affairs of the Company was managed by the Resolution Professional under the provisions of Insolvency and Bankruptcy Code, 2016, no stakeholders relationship committee was functional. The Board of Directors of the Company constituted upon approval of the Resolution Plan at their meeting held on October 9, 2023 formed an Stakeholders Relationship Committee in accordance with the applicable laws.
AUDITORS
Statutory Auditors
The financial statements prepared by Mr. Subhash Kumar Kundra, Resolution Professional have been audited by M/s. R. N.
Marwah & Co LLP, Chartered Accountants (FRN: 001211N/N500019), statutory auditors of the Company.
The notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.
Secretarial Auditors
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 had appointed M/s. Ajit Kumar & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure A".
BOARD'S EXPLANATION OR COMMENTS ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE AUDITOR IN HIS REPORT
Reconstituted Board of Directors' View on the Statutory Auditor's Qualifications/Reservations
The Hon'ble Company Law Tribunal, Principal Bench, New Delhi (hereinafter referred to as "Adjudicating Authority") admitted the Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") application filed against M/s. CLC Industries Limited by Financial Creditor, Edelweiss Asset Reconstruction Company Limited U/s.7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") and appointed Mr. Subhash Kumar Kundra as the Interim Resolution Professional under the Code vide order dated January 03, 2020. Further, the Committee of Creditors (hereinafter referred to as "CoC") constituted during the CIRP has confirmed the appointment of Mr. Subhash Kumar Kundra as the Resolution Professional (hereinafter referred to as "RP") on February 20, 2020 to manage the affairs of M/s. CLC Industries Limited as per the provisions of the Code.
The Resolution Plan as submitted by Successful Resolution Applicants Consortium of M/s. Manjeet Cotton Pvt. Ltd. & M/s. Vitthal Corporation Ltd. was approved by members having 92.85% voting share in the CoC on April 02, 2021. The application for approval of the Resolution Plan was filed by the RP with the Adjudicating Authority on May 05, 2021. The Adjudicating Authority approved the said Resolution Plan vide its order pronounced on May 12, 2023.
In terms of the Resolution Plan, all the existing directors without any further action being required on part of any person, shall deemed to have resigned from the Board of Directors of the Company. On July 12, 2023 and on August 31, 2023, the Implementation and Monitoring Committee reconstituted new Board of Directors as below:
(The newly constituted Board of Directors as referred above at their first meeting held on October 9th, 2023 have appointed Mr. Bhupendra Singh Rajpal as Chairman and Whole-time Director of the Company for a period of 5 years and Mr. Sanchit Bhupendra Singh Rajpal appointed as Managing Director of the Company for a period of 5 years, subject to approval of the members of the Company at the ensuing Annual General Meeting).
In view of above, entire management & powers of the board of directors of the company including maintenance of books of accounts for the period under consideration i.e. F.Y.2022-23 was entirely looked upon by the RP(As F.Y.2022-23 being part & parcel of the Phase I period in terms of Clause 3.12 of the Resolution Plan i.e. date of approval of the Resolution Plan by the Committee of Creditors till the NCLT Approval Date). The Statutory Auditor himself has also identified the RP as the Management/Board in the Para ‘Management's Responsibility and Those Charged with Governance' in his Statutory Audit Report vide dated October 31, 2023 on the Standalone Financial Statements.
As a result, the newly reconstituted aforesaid Board of Directors' have no legitimate imperative/prerogative in its farthest domain to comment/express anyviews over the qualifications/reservations of the Statutory Auditor as issued in his audit report.
Moreover, it is to be noted that the newly reconstituted Board of Directors as referred above are nowhere the signatories of the audited financial statements for the period under consideration as the appointment of the reconstituted Board itself has been made post the closure of the financial year i.e. after 31.03.2023 & approval of the Resolution Plan by the Adjudicating Authority.
REPORTING OF FRAUD BY AUDITORS
During the year under review, neither the statutory auditors nor the secretarial auditors has reported to the Audit committee, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officer or employees, the details of which would need to be mentioned in the Board's report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
The Company was under Corporate Insolvency Resolution Process ("CIRP") and the financial creditor's petition to initiate the CIR Process was admitted by the Hon'ble National Company Law Tribunal ("NCLT"), Principal Bench, New Delhi by vide Order dated January 3rd, 2020. In accordance with Section 30(6) of the Insolvency and Bankruptcy Code ("IBC"), the Resolution Plan submitted by Manjeet Cotton Private Limited & Vitthal Corporation Limited ("Resolution Applicants") as approved by the Committee of Creditors with the requisite majority as per Section 30(4) of the IBC, was filed with Hon'ble NCLT, Principal Bench, New Delhi and The Hon'ble NCLT, Principal Bench, New Delhi, vide its order dated May 12th, 2023, approved the Resolution Plan submitted by the Resolution Applicants.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
As the Company was under Corporate Insolvency Resolution Process ("CIRP"), during this tenure Company has not transferred any fund to the Investor Education and Protection Fund.
CORPORATE GOVERNANCE
Since the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and affairs of the Company was managed by the Resolution Professional and the former Board of Directors and its committees were not functional, the disclosure in Corporate Governance are not provided for the financial year 2022-23.
The Board of Directors constituted pursuant to the Resolution Plan approved by the Hon'ble National Company Law Tribunal, Principal bench, New Delhi vide its order dated May 12th, 2023 is taking appropriate steps / actions after its formation with effect from August 31st, 2023 and constituted various committees, adopted policies in accordance with the applicable laws during the implementation of Resolution Plan.
Since the required actions have taken in current financial year, the Corporate Governance Report shall be provided by the Board of Directors for the financial year 2023-24 in the next annual report.
MANAGEMENT DISCUSSION AND ANALYSIS
Since the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and affairs of the Company was managed by the Resolution Professional and there were no business operations as such in the Company, the newly constituted Board of Directors of the Company which took control effective from August 31, 2023 is not in position to provide disclosure on management discussion and analysis for the financial year 2022-23.
The details of significant changes in key financial ratios are provided at Note no. 60 of the financial statements provided by the
Resolution Professional.
The disclosure in Management Discussion and Analysis Report shall be provided by the Board of Directors for the financial year
2023-24 in the next annual report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) period, no business activity has been carried out during the CIRP proceedings.
There were no foreign exchange earnings and outgo during the financial year as per the audited financial statements.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
As the Board of Directors of the Company is recently constituted with effect from August 31st, 2023, the necessary steps shall be
taken to effectively put the systems for internal control and its adequacy.
ACKNOWLEDGEMENTS
Your Directors express their gratitude to the Company's vendors, customers, banks, financial institutions, shareholders and society at large for their understanding and support. Finally, your directors acknowledge the dedicated services rendered by all employees of the Company.
On behalf of the Board of Directors
Bhupendra Singh Rajpal
Sanchit Bhupendra Singh Rajpal
Whole Time Director
Managing Director
DIN: 00311202
DIN: 00311190
Place: Aurangabad
Date: 07.12.2023