Valecha Engineering Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Jun 2023
Auditor and Management Disclosures and Notes for the quarterly results dated 30 Jun 2023
Notes to the unaudited Standalone and Consolidated Statements of Financial Results for the quarter ended June 30, 2023:
1. This result has been prepared in accordance with Regulation 33 of the SEBI (Listing Obligations and Disclosures Requirement) Regulation, 2015.
2. The Company is engaged in "Construction Activity" and there are no other reportable segments under Ind AS 108 "Operating Segments".
3. Hon'ble, NCLT, Mumbai, passed order dated 21.10.2022 in Company Petition no. CP (IB) No.594/MB-IV/2021 filed by STATE BANK OF INDIA, the Financial Creditor /Petitioner, under section 7 of Insolvency & Bankruptcy Code, 2016 (I&B Code) against the Company, Corporate Debtor/Respondent, for initiating Corporate Insolvency Resolution Process (CIRP).
Mr. Anurag Kumar Sinha, a Registered Insolvency Professional having Registration Number [IBBI/IPA-001/IP-P00427/2017-18/10750] has been appointed as Interim Resolution Professional (Later on confirmed as RP by CoC), to carry out the functions as mentioned under I&B Code for running of CIRP of the Company.
4. The above unaudited financial results were prepared by the management of the Company and RP took the same on record basis. The Statutory Auditors have carried out the Limited Review of the Financial Results for the quarter ended June 30, 2023 vide their report dated August 23, 2023.
5. With respect to the financial results for the quarter ended June 30, 2023, the RP has signed the same solely for the purpose of ensuring compliance by the Corporate Debtor with applicable laws, and subject to the following disclaimers:
i. The RP has furnished and signed the report in good faith and accordingly, no suit, prosecution or other legal proceeding shall lie against the RP in terms of Section 233 of the Code;
ii. No statement, fact, information (whether current or historical) or opinion contained herein should be construed as a representation or warranty, express or implied, of the RP including, his authorized representatives and advisors;
iii. The RP, in limited review of the unaudited financial results and while signing this statement of unaudited financial results, has relied upon the assistance provided by the Key Managerial Personnel (“KMP”) of the Corporate Debtor, and representations and statements made by the KMP of the Corporate Debtor, in relation to these unaudited financial results. The statement of unaudited financial results of the Corporate Debtor for the quarter ended June 30, 2023 have been taken on record by the RP solely on the basis of and on relying the aforesaid representations and statements of the aforesaid directors and the erstwhile management of the Corporate Debtor. For all such information and data, the RP has assumed that such information and data are in the conformity with the Companies Act, 2013 and other applicable laws with respect to the preparation of the unaudited financial results and that they give true and fair view of the position of the Corporate Debtor as of the dates and period indicated therein. Accordingly, the RP is not making any representations regarding accuracy, veracity or completeness of the data or information in the unaudited financial results.
6. Valecha Kachchh Toll Roads Limited (VKTRL), a subsidiary of the Company, has continued to incur losses and has eroded its networth completely. On 20.03.2023, Canara Bank being the lead banker, has filed an insolvency petition under Section 7 of Insolvency and Bankruptcy Code, 2016 before the Hon’ble NCLT, Mumbai Bench which is pending for admission. Further, Valecha Engineering Limited (VEL) has given Corporate Guarantees of Rs.990.47 Crores for the loans availed by VKTRL. The Company has not made any provision on this count in view of likely admission of VKTRL in to CIRP and then likely resolution also.
The Company has also neither evaluated any impairment provisions for expected credit losses (ECL) as required under Ind AS 109 "Financial Instruments" nor made any fair valuation as per the requirements of Ind AS 113 “Fair Value Measurements” in respect of its Investment made of Rs. 39.84 crores and loan given of Rs. 73.46 crores to VKTRL, in view of ongoing CIRP proceedings of Valecha Engineering Limited, where Resolution Plans have already been received from Resolution Applicants and one of the Resolution Plan likely to be approved and implemented.
7. Valecha LM Toll Private Limited (VLMTPL), an erstwhile step down subsidiary of the Company, has been referred to liquidation vide Order dated 27th October, 2020 of Hon’ble NCLT, Mumbai and liquidation process has commenced. The asset of VLMTPL has been auctioned and the proceeds have been distributed amongst the secured financial creditors of VLMTPL. Further, Corporate Guarantees of Rs.261.14 Crores given by VEL has been invoked by the secured financial creditors of VLMTPL against the Company. However, the Company has not made any provision on this count in view of ongoing CIRP proceedings of VEL and likely approval of Resolution Plan of Resolution Applicant.
8. The Holding Company has also not evaluated impairment provisions for expected credit losses (ECL) as required under Ind AS 109 “Financial Instruments” in relation to investments made for Rs.2.19 crores in four subsidiary companies, loans and advances given of Rs.180.46 crores to four subsidiary companies and one step-down subsidiary company.
In view of the primary security already provided by the Subsidiaries and step-down subsidiary company, the Holding Company has not provided for any further liability towards Impairment of above referred Loans & Advances and Investment in Subsidiaries as per the requirements of Ind AS 109 & Ind AS 113.
Corporate Guarantees of Rs. 168.81 Crores has been given by VEL for the loans granted to one subsidiary and one step-down subsidiary a by secured financial creditor. However, the Company has not made any provision on this account in view of ongoing CIRP proceedings where Resolution Plans have already been received from Resolution Applicants and one of the Resolution Plan likely to be approved and implemented.
9. The Company has not evaluated expected credit losses for long outstanding Trade Receivables of Rs. 299.86 crores which includes Rs. 99.45 crores pertaining to additional claims raised during earlier years on account of escalation and various other reasons which are under consideration and deliberation before various authorities. The Company has not evaluated impairment provisions for expected credit losses as required under Ind AS 109 "Financial Instruments" for loans extended to various related parties (other than subsidiaries, step down subsidiaries and associate company) amounting to Rs. 6.50 crores, loans given to other than related parties amounting to Rs. 26.07 crores and advances to suppliers amounting to Rs.31.81 crores as at March 31, 2023 in view of ongoing CIRP Proceedings against VEL where Resolution Plans have already been received from Resolution Applicants and one of the Resolution Plan likely to be approved and implemented.
10. The Company’s borrowing facilities with various banks and NBFC’s have continued to remain under NPA classification. In view of NPA classification, company has not provided any interest liability post March 31, 2018.
Presently, the Company has also not provided interest which may arise towards delayed payment / non-payment of dues towards tax deducted at source as on June 30, 2023.
11. The Company has an outstanding principal liability of Rs. 22.94 crores as at June 30, 2023 payable to public fixed deposit holders. In view of the already weak financial position of the Company, the Company has not provided any further interest on these outstanding overdue deposits. Further, there has been NCLT order dated 03.04.2019, 11.06.2019, 22.08.2019, 14.11.2019, 26.05.2020 and NCLAT order dated 12.02.2020 in the matter.
12. Other Non Current Assets as at March 31, 2023 includes Rs 31.35 crores receivable towards various indirect taxes from Government Authorities which are pending for assessments.
13. The Company has many project sites which have either been de-mobilized or completed or otherwise shut / non-operational. The Company could not obtain details of transactions effecting, if any, through Bank accounts previously operated through such project sites. There have been no operations in such project sites during the quarter ended June 30, 2023. Such Project Sites comprises total assets of Rs. 84.36 crores [including Trade Receivables Rs. 70.46 crores and loans to other parties Rs. 5.54 crores referred in point 9 above, balances with revenue authorities of Rs. 8.33 crores referred in point 12 above and total liabilities of Rs. 26.70 crores as at June 30, 2023.
14. The Holding Company has certain in-operative Bank accounts, which have turned dormant on account of closure of sites, changes in signatories etc. The Holding Company is in the process of obtaining the statements of such inoperative and dormant bank accounts.
15. The accounts of certain Banks, Loans & Advances given, Trade Receivables, Other Current Assets, Lenders’ liability, Trade Payables and Other liabilities are subject to confirmations, reconciliations, and adjustments.
16. The accumulated losses incurred in the past years have resulted in erosion of Company's peak Net worth. However, in view of the fact that CIRP has been initiated against the company and since as per provisions of IBC, 2016, as the company is to be kept as a going concern, unaudited financial results are prepared assuming that it will continue as a going concern. During the ongoing CIRP, the RP has also received claims from various operational and financial creditors.
In certain instances, the amount of the claim admitted or to be admitted by RP under CIRP differ from the amount reflecting in the books of accounts of the Company. The above unaudited financial results are drawn on the basis of figures appearing in the books of accounts of the Company as on June 30, 2023.
17. Specific notes related with Subsidiary Companies:
a) Valecha Reality Limited (VRL)
i. VRL has given a loan amounting to Rs 6.51 crores to M/s SVK Arcade LLP which is long outstanding in the Books of Accounts. VRL is not recognizing & receiving any interest on such loan and has neither made any provision for the loan amount outstanding.
ii. VRL has received loans from Valecha Engineering Limited (“VEL”) and Valecha Infrastructure Ltd (“VIL”) to the tune of Rs. 0.28 crores and Rs. 6.52 crores respectively. VRL has not paid any interest on the same nor has it made any provisioning of the interest payable. VEL has not recovered any interest in view of already weak financial position of VRL. Similarly, VIL has also not recovered any interest amount from VRL in view of already weak financial position of VRL.
b) Valecha Kachchh Toll Roads Limited (VKTRL)
VKTRL continues to prepare its Financial Statements on going concern basis even though it has continued to incur significant losses for the quarter ended June 30,2023 and in previous financial years. It has also continued to default in repayment of its financial obligation including interest. VKTRL has received PCOD (provisional commercial operation date) for section 1 from GSRDC on 13.05.2015 which was operational and revenue was being generated upto 23.02.2023. VKTRL was also close to final completion and commencement of toll operations for Section 2 of the Project. VKTRL has already submitted a claim of Rs.1862.03 crores on GSRDC towards delay events upto and including 31.03.2022 on 26.07.2022. GSRDC has also made a counter claim of Rs. 416.27 Crores on VKTRL and accordingly both the parties have moved to conciliation process in accordance with the provisions of the Concession Agreement. During the pendency of the Conciliation process, GSRDC has terminated the contract with VKTRL on 23.02.2023 and has taken over control of its toll operations. Further GSRDC has also invoked arbitration proceedings vide letter dated 07.03.2023 during the pendency of the conciliation process which VKTRL has strongly opposed and have asked for completion of conciliation process before invoking of arbitration clause. VKTRL is also in the process to submit an upward revised Statement of Claims for the period upto and including 23.02.2023.
On 20.03.2023, Canara Bank being the lead banker, has filed an insolvency petition under Section 7 of Insolvency and Bankruptcy Code, 2016 before the Hon’ble NCLT, Mumbai Bench which is pending for admission.
18. Consolidated results for the quarter ended June 30,2023 includes results of following Subsidiaries:
Sr. No. Name of Company Relation
1 Valecha Infrastructure Limited Wholly Owned Subsidiary Company
2 Professional Realtors Private Limited Wholly Owned Subsidiary Company
3 Valecha International (FZE) Wholly Owned Subsidiary Company
4 Valecha Kachchh Toll Roads Limited Subsidiary Company
5 Valecha Reality Limited Subsidiary Company
6 Valecha Badwani Sendhwa Tollways Limited Step-Down Subsidiary Company
In case of Valecha International FZE, Holding Company’s Management certified results have been considered for consolidation.
The Holding Company could not consolidate financial results of “Aryavrat Tollways Private Limited”, an Associate Company, as it has not yet received its results. The Company has not consolidated financial results of this associate company in the previous year also. Based on the discussion with respective management, there are no material or significant transactions in the associate company, hence we do not foresee any material impacts on the financial results of the Holding Company.
19. The previous period's figures have been re-grouped/ re-classified wherever required to conform to current period's classification. All figures of financials are stated as Rs. in Crores except otherwise stated.
For VALECHA ENGINEERING LIMITED
Anurag Kumar Sinha
Resolution Professional Of Valecha Engineering Limited
IBBI/IPA-001/IP-P00427/2017-18/10750
For VALECHA ENGINEERING LIMITED