Jayaswal Neco Industries Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Sep 2021
Auditor and Management Disclosures and Notes for the quarterly results dated 30 Sep 2021
Notes :
1 The above results have been reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 11th November, 2021. The Statutory Auditors of the Company have carried out a Limited Review of the above results.
2 "As at 30th September, 2021, eleven out of twelve bankers of the Company have assigned their fund based debt along with the underlying financial documents together with their rights, benefits and obligations in favour of Assets Care & Reconstruction Enterprise Ltd (ACRE) acting in its capacity as trustee of various trusts (“These Trusts”). One banker has done One Time Settlement (OTS) of its debt dues with the Company.
On 23rd August, 2021, the Company has entered into a restructuring support agreement with These Trusts in relation to restructuring of its outstanding debt owed to These Trusts, in accordance with Section 9 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (“SARFAESI Act”), as amended and restated from time to time (“Restructuring Support Agreement”).
To comply with the conditions of the “Restructuring Support Agreement”, which is the principal agreement, as part of the transaction documents, the Company has also entered into a Shareholders’ Agreement (SHA) on 23rd August, 2021 with These Trusts and the Promoters and Promoter Group of the Company.
The debt restructuring would become effective upon completion of certain condition precedents under the Restructuring Support Agreement, which are yet to be achieved; accordingly the above Restructuring Support Agreement has yet not become effective. Accounting effect will be made in the Books of Accounts of the Company as and when the above agreement becomes effective.
"
3 "Subsequent to the quarter end, on receipt of necessary approvals and pursuant to the agreements as detailed in note 2 above, on 28th October, 2021 the Company has issued and allotted 30,52,81,848 equity shares to These Trusts and 2,70,83,333 equity shares to the Promoters / Promoter Group (face value of Rs. 10 each) at the issue price of Rs. 28.80 per share aggregating to Rs. 95721 Lakhs.
Accordingly, Rs. 87921 Lakhs of the total borrowings from these trusts and Rs. 7800 Lakhs of Advance against Share Application Money and Inter Corporate Deposits of the Promoters / Promoter Group in the Company have been converted into equity shares of the Company.
The above has resulted in increase in the Paid-up Equity Share Capital from Rs. 63863 Lakhs to Rs. 97099 Lakhs and increase in Securities Premium from Rs. 96346 Lakhs to Rs. 158830 Lakhs.
The pre issue and post issue equity shareholding of the Company on a fully diluted basis is as follows:-
"
Category of Equity shareholders Pre-issue equity shareholding on a fully diluted basis Post-issue equity shareholding on a fully diluted basis
Promoter and Promoter Group 68.79% 48.03%
Public 31.21% 51.97%
- Out of which, These Trusts Nil 31.44%
The existing promoter and promoter group of the Company continue to retain management control of the Company post the aforesaid issuance & allotment of equity shares.
4 "The Company underwent significant financial stress in the earlier years due to cancellation of its three captive coal mines, payment of additional levy on mined coal as per the Hon’ble Supreme Court order, COVID 19 related lockdown of business units, its consequent adverse impact on the Company and various other reasons which have resulted in financial constraints to the Company, losses in the operations, wipe out of the net worth and calling back of loans by few of the secured lenders. Further, an appropriate debt restructuring scheme was approved by the super majority of the secured lenders and the Company had complied with the conditions of debt restructuring scheme and got its Master Restructuring Agreement signed by the Lenders.
However on the directions of Reserve Bank of India (RBI), which had not agreed to the approved debt restructuring scheme being fully implemented within the stipulated time line of 13th December, 2017, State Bank of India (SBI), the erstwhile lead secured lender, had filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the Company claiming an amount of Rs. 51383 Lakhs as default as on 30th November, 2017.
In view of the Status Quo order issued by the Hon’ble Supreme Court on 16th April, 2018, the case had been adjourned sine die by the National Company Law Tribunal (NCLT), Mumbai in its hearing dated 14th November, 2019. The matter is at pre admission stage in NCLT and would be listed only after the Special Leave Petition (SLP) filed by the Company is disposed of by the Hon’ble Supreme Court.
As mentioned in note 2 and 3 above, as on 30th September, 2021, ACRE, acting in its capacity as trustee of various trusts, holds the entire debt of the Company and the Company has entered into a Restructuring Support Agreement with These Trusts. Further subsequent to the quarter end, a part of loan has been converted into equity shares and the Promoters / Promoter Group have also infused money towards the equity shares. The steel industry is performing well and the Company is working with enhanced capacity utilization to keep up with market demand.
It is also expected that the implementation of the proposed debt restructuring would improve the cash flow position of the Company, result in reduction of financial stress and will lead to realignment of debt to a sustainable level and prompt servicing of debt dues by the Company.
Further the Company has taken active steps for effective and efficient operations including cost reduction. Accordingly the Company continues to prepare its books of account on Going Concern basis.
"
5 The agreements in respect of non-current borrowings as at 30th September, 2021 of Rs 161977 lakhs contains certain restrictive covenants including non-adherence of initial Rupee Term Loan repayment schedule and non-payment of interest thereon, as stipulated and debt service facility ratio. The Company has not complied with the terms of these covenants. In view of the above Restructuring Support Agreement, the Company has not classified the said long term borrowings to current liabilities as required by Ind AS 1 – “Presentation of Financial Statements”. In respect of this, the auditors have issued modified report on the results for the quarter and half year ended 30th September, 2021 and also the reports on the financial statements of the earlier years.
6 "In the earlier years, the Directorate of Enforcement by way of two attachments had provisionally attached the Plant and Machinery under installation at Dagori Integrated Steel Plant situated at Bilha, Bilaspur (Chhattisgarh) and certain property, plant and equipment at Steel Plant Division, Siltara, Raipur to the extent of Rs. 30758 Lakhs for alleged misuse of coal raised from Gare Palma IV/4 coal block in Chhattisgarh.
The Adjudicating Authority had confirmed the above provisional attachments. Subsequently, the Appellate Authority stayed both the attachments on an appeal filed by the Company where the matter has been put up for hearing on 11th January, 2022. The Company has a good case on merits, is likely to succeed in refuting the allegations and does not expect any material liability on the Company on this account."
7 "In-spite of the continuous prevalence of COVID 19 pandemic, the Company achieved normal business operations during the quarter ended 30th September, 2021.The Company will continue to closely monitor any material changes arising out of future economic conditions and impact on its business including recoverability of inventories and trade receivables.
"
8 The figures for the corresponding previous periods / year have been regrouped / rearranged wherever necessary, to make them comparable.