Kwality Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Sep 2021

1. The Hon’ble Adjudicating Authority, National Company Law Tribunal, Bench III, New Delhi (hereinafter, *‘NCLT*’) vide order dated 11 th December, 2018 ordered initiation of the Corporate Insolvency Resolution Process (hereinafter, “CIRP”) in respect of Kwaiity Limited, (In Liquidation) (hereinafter "Corporate Debtor” and/or “Company"’) on an application filed by one of the financial creditors of the Corporate Debtor under Section 7 of the Insolvency Bankruptcy Code, 2016 (hereinafter, "T&B Code”). Mr. Shailendra Ajmcra IP Registration No. IBBI/IPA-001/IP-P00304/2017-18/10568 was appointed as the Interim Resolution Professional by the Hon’ble NCLT and was later continued and appointed as the Resolution Professional by the Committee of Creditors (hereinafter, “CoC"”) of the Corporate Debtor in their meeting held on 11 January 2019 under the provisions of the I&B Code.

As by the end of the CIRP period, no resolution plan for the Corporate Debtor was approved by the CoC, the Hon’ble NCLT vide order dated 11 January 2021 ordered for initiadon of liquidation process in respect of the Corporate Debtor under the provisions of the I&B Code. Mr. Shailendra Ajmera having IP Registration No: IBBI/IPA-001/IP-P00304/2017-18/10568 has been appointed as the Liqxiidator of the Corporate Debtor by the Hon*ble NCLT. In terms of Section 34(2) of the I&B Code on the commencement of the liquidation process, all the powers of the Board of Directors and key managerial personnel of the Company ceased to have any effect and stood vested in the liquidator.

2. In terms of Regulation 31A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (hereinafter, “Liquidation Process Regulations”), the Liquidator constituted, the Stakeholders Consultation Committee (hereinafter, “SCC”) of the Corporate Debtor. In accordance with Regulation 32A of the Liquidation Process Regulations, the Stakeholders Consultation Committee of the Corporate Debtor recommended to sell the Corporate Debtor or its business as a going concern as per sub-regulation (e) or (Q of Regulation 32 of the Liquidation Process Regulations in order to maximizes the value of the Corporate Debtor. Based on recommendation of the SCC, in accordance with Section 35(l)(e) read witii Regulation 32(e) & (Q, Regulation 32A and Regulation 2B of the Liquidation Process Regulations read with Order dated 11th January 2021 passed by the Hon’ble NCLT, the Liquidator took steps to sell the Corporate Debtor or its business, as a “going concern”, including by way of scheme, if any proposed by the creditors/members of the Corporate Debtor under Section 230 of the Companies Act, 2013. In pursuance thereto, the Liquidator vide advertisement dated 11 February 2021 invited prospective bidders to submit their expression of interest for purchase of the Corporate Debtor or it’s business as going concern.

In light of the same, the Liquidator released the E-Auction sale notice for sale of the Corporate Debtor or its business as going concern in compliance with Regulations 32 and 32A of the Liquidation Process Regulations while keeping the business of the Corporate Debtor as a going concern. Regulation 32A (3) of the Liquidation Process Regulations prescribed time of 90 days from the liquidation commencement date for exploring sale of a corporate debtor or its business as a goir^ concern. Therefore, the Liquidator filed an application for extension before Hon’ble NCLT and prayed for 90 days extension in order to explore the sale of the Corporate Debtor or its business, as a "going concern”. The Hon’ble NCLT vide order dated 4 May 2021 granted 90 days extension from 10 April 2021 i.e. till 9 July 2021. Due to sudden surge of Covid-19 pandemic and imposition of various restrictions including lockdowns impacted the sale process, hence, the Liquidator filed extension/ exclusion for 140 days in order to complete the process of sale of the Corporate Debtor or its business, as a “going concern”. The Hon’ble NCLT vide order dated 28 July 2021 granted exclusion of 50 days on account of Covid-19 related restrictions and lockdown period from 19th April 2021 till 7th June 2021 out of the liquidation process time line and an extension of SM) days period for completion of Sale of Kwaiity Ltd (In Liquidation) as a Going Concern with effect from 2 August 2021.

3. The Liquidator of the Corporate Debtor conducted the E-Auction process on 24.09.2021 in accordance with the Process Memorandum dated 15.04.2021 read with the addendums issued from time to time for sale of the Corporate Debtor or its business as a going concern under the provisions of the IBC read with Liquidation Regulations wherein on the closing of the auction, Sarda Mines Private Limited emerged as the highest bidder (‘TIighest Bidder”).

In accordance with the provisions of the IBC, Liquidation Regulations and the terms of the Process Memorandum, the Liquidator has issued Letter of Intent on 27.07.2021 (“Lol”) in favour of the highest bidder for unconditional acceptance of Lol which has been executed by the highest bidder on 14.10.2021. Further, in accordance with the provisions of the IBC, Liquidation Regulations and the terms of the Process Memorandum, the highest bidder is required to deposit the entire sale consideration amount within 90 (ninety) days from the date of the signed Lol. Provided that payments made after 30 (thirty) days till maximum period of 90 (ninety) days shall attract simple interest at the rate of 12% p.a. on the highest bid as per the provision of the IBC. Therefore the process for sale in favour of Sarda Mines Private Limited is yet to conclude as the same shall be subject to satisfaction and performance of the provisions of the IBC, Liquidation Regulations and the Process Memorandum including orders of Hon’ble NCLT, if any. Further, Sarda Mines Private Limited has filled an application for seeking concessions and reliefs which is sub-judice before the Hon*ble NCLT.

4. These standalone financial results for the quarter and half year ended 30 September 2021 of the Company have been prepared and certified by Mr. Sharad Bhandari, Chief Financial Officer (hereinafter, “CFO”) of the Corporate Debtor in accordance with Regulation 33(2) of the SEBI (Listing Obligations and Disclosure Requirements) Rules, 2015.

The unaudited financial results were placed before the Liquidator and the CFO of the Corporate Debtor on 29 November 2021 for their consideration. Accordingly, the unaudited financial results were considered, recommended and approved in the meeting. In view thereof, the Liquidator, in reliance of such examination and the representations, clarifications and explanations provided by the CFO, has approved the same. To the extent, these unaudited financial results indicate or confirm to events prior to the initiation of CIRP, the confirmation is being provided only by the CFO. The Liquidator is relying on the representation letter dated 29 November 2021 for all information and confirmation in relation to the day to day functioning of the Company and all information and confirmation in relation thereto.

The approval of the standalone financial results has been granted by the Liquidator in reliance of representations, clarifications and explanations provided by the CFO and solely in discharge of the powers of the Board of Directors being exercised by him in terms of Section 34(2) of the I&B Code, as the powers of the Board of Directors ceased to have any effect and stood vested in the liquidator during the liquidation process of the Company.

5. In accidance with the requirements of the IND AS-108 “Operating Segments”, the Company’s business consists of one reportable business segment i.e.

Manufactunng and Processing of Milk and Milk Products”, hence separate disclosures pertaining to attributable revenue, profits, assets, liabilities and capital ctnployed are not required.
b. The Company has not pnn-ided for any l.abiUt)- towards interest, penal interest charges and any foreign currency fluctuation on claims by creditors for the penod post the Liquidation Commencement Date, since as part of tile Liquidation process, the claims for interest, penal interest charges and foreign currency fluctuation can impact their claims only till the liquidation commencement date.

6. Income Tax:

a. Basis the assessment proceedings under Section 132 under the IT Act, the Income Tax- authiorities have raised demand amounting to INR 9 06 439 31 lakhs (including interest upto 30 Dec 2019) beginning from AY 201M 2 till AY 2018-19. The Demand has been raised u/s 143(3) r.w.s. 153A, 154 and u/s 144 r.w.s. 153A of the 11 Act. I he (.ompany has filled appeal in January 2020 dispuring the demand widi the Commissioner of Income-tax (Appeals). Further, CIT(A) issued notice u/s 250 of Income tax Act, 1961 for submission of gi-ound wise u-ritten submission against the appeal filled in Januar>’ 2070 for which ad,oui-nment has been sought by the Company. In addition to the demand, die Income Tax deparmient has also issued show cause notice for pe-nalty proceedings for AY 2011-12 to 2018-19 covered u/s 274 r.w.s 271(l)(c) and 274 r.w.s 270A of the IT Act.

b. Pursuant to initiation of liquidation process, Income Tax department has filed its claim Form C dated 4 February 2021 in terms of the Liquidation Process llej^laoons of INR 10,24,276.42 lakhs. 11,e amount of INR 10,24,276.42 lakhs included demand of INR 9,06,439.31 laklis as mentioned in 5(a) above and additional interest of INR 117,837,11 lakhs from 31 Dec 2019 tiU 11 Jan 2021. Since the demand is under appeal, Ae claim to the extent of INR 64,437.54 a • IS (out of INR 10,24,276.42 lakhs) has been admitted by the Liquidator based on opinion taken from income tax exjiert and die balance amount of INR 9,59,838.88 lakhs has been shown as contingent liabiUty. Further, an appeal under Section 42 of the IBC Code. 2016 has been filled by Income Tax authorities before die Hon’ble NCLT on 15 July 2021 challenging the decision of liquidator rejecting certain claim amount and directing acceptance of the amount claimed in entiret}’ which is sub-judice before the Hon’ble NCLT.

7. On September 21, 2020 the officers of the Central Bureau of Investigation (“CBI”) inspected the registered office cum corporate office and other business locations of the Company for the purpose of the investigation under Case RC 2232020A0005 of CBI/AC-V registered on September 10, 2020 under the provisions of the Prevention of Corruption Act, 1988. The above case is stated to have been registered for the offences of fraud and wrongful loss of public money. The investigation is being carried out pursuant to a complaint filed by the Financial Creditor who has already filed an application under section 7 of the Insolvency &: Bankruptcy Code, 2016.

8. The figures for the previous periods have been regrouped/ rearranged wherever neccssary.