sip industries ltd Directors report

The financial statement for the financial year ended March 31, 2023, are prepared in accordance with the Companies Act, 2023 (“the Act”) and Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.

Transfer to reserves:

No amount has been transferred to reserves for the financial year under review.

Dividend:

The Board does not recommend any dividend for the financial year under review. There are no unpaid and unclaimed dividends of previous years and hence the requirement to transfer amount to investor education and protection fund is not applicable to the Company.

State of Companys affairs:

During the year under review, the Company has not carried out any business activities. The Company was under revival process till it has been handed over to Resolution Applicant. Your directors are trying to ascertain new opportunities so that the business can be diversified and company as well as stakeholders be in better position barring any unforeseen circumstances.

Material changes and commitments affecting the financial position of the Company:

There have been no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year of the Company to which the financial statements related to and date of this report. There has been no change in the nature of business of the Company.

Implementation of the resolution plan:

The Honble National Company Law Tribunal, Chennai Bench (“NCLT”) had approved the resolution plan submitted by the Resolution Applicant vide its order dated April 25, 2022. The approved resolution plan has been implemented in the following manner:

Infusion of funds in the Company by the Resolution Applicant:

The Resolution Applicant had infused Rs. 32,33,026 in the Company by way of investment in the equity shares of the Company and such infused amount was utilised towards the discharge/ settlement of the admitted operational creditors debt (as defined in the approved resolution plan), allotted CIRP cost amount (as defined in the approved resolution plan), mandatory dissenting financial creditor payments (as defined in the approved resolution plan) and upfront FC debt payment (as defined in the approved resolution plan) in a manner and on such terms as provided under the approved resolution plan.

Assignment of debt to the Resolution Applicant

The creditors had assigned an amount of Rs. 32,00,000/- being payment to sole financial creditor, Rs.18133/- being payment to NSDL and Rs. 14,893/- being payment to Provident Fund as defined under the approved resolution plan to the Resolution Applicant.

Extinguishments/cancellation of erstwhile promoters shares

The entire existing issued, subscribed and paid-up share capital of the Company held by the erstwhile promoters were extinguished and cancelled. Thus, 29,21,719 equity shares of Rs. 10/- each held by the erstwhile promoters were extinguished.

Reduction and reconstitution of public shareholding

The share capital of the Company had been reconstituted in such manner that the paid up share capital held by the public shareholders were equivalent to 5% of the entire issued, subscribed and paid-up share capital of the Company.

Capital structure: Authorised share capital

During the year under review, the authorised share capital of the Company remained same i.e., Rs. 10,00,00,000/- (Rupees Ten crores only) divided into 1,00,00,000 (One crore only) equity shares of Rs. 10/- (Rupees ten only) each.

Paid-up share capital

Pursuant to the implementation of the approved resolution plan, the following changes took place in the paid-up share capital of the Company during the year under review:

The Company had extinguished and cancelled 29,21,719 Equity shares of Rs. 10/- each held by the erstwhile promoters.

The Company had issued and allotted 44,42,594 equity shares of Rs. 10/- to the Resolution Applicant.

The new paid-up share capital of the Company after taking into account aforesaid changes is Rs. 4,67,64,150/- (Four Crores Sixty-Seven Lakhs Sixty-Four Thousand One Hundred and Fifty only) divided into 46,76,415 (Forty-Six Lakhs Seventy-Six Thousand Four hundred and fifteen only) equity shares of Rs. 10/- each.

Annual return:

In terms of Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended, the annual return of the Company will be available on the website of the Company at www.sip-industries.com.

Number of meetings of the Board:

During the CIRP period, the powers of the board of directors stood suspended and no meeting of the board of directors of the Company were held until the completion of CIRP. During the financial year, Monitoring Committee has met once on January 05, 2023. After the end of financial year till the date of this report, Board has met 5 times on April 10, 2023, May 11, 2023, May 31, 2023, August 14, 2023 and November 14, 2023.

Directors and key managerial personnel:

a) Directors:

The following changes took place during the financial year ended March 31, 2023 and upto the date of this report:

Dissolution of erstwhile board of directors of the Company

During the CIRP period, the powers of the board of directors stood suspended and the management of the affairs of the Company was vested with the interim resolution professional/resolution professional. Pursuant to the implementation of the approved resolution plan, the erstwhile board of directors were dissolved and all the directors of the erstwhile board of directors i.e., Mr. Raghunathan Kettandapatti Chakravarthy (DIN: 00007605) Chairman & Managing Director, Ms. Rama Raghunathan (DIN: 00012134)

Women Director, Mr. Ravi Devarajan (DIN: 00577682), Mr. Sukumar Kettandapati (DIN: 00605416), Mr. Prabhakar Rao Udipi (DIN: 01523985) and Mr. Srinivasan Madabusi Thozhur (DIN: 00516762) were deemed to have resigned on January 5, 2023.

Reconstitution of board of directors of the Company

Pursuant to the implementation of the approved resolution plan, the Monitoring Committee had re-constituted the board on April 10, 2023 and following appointments were made:

As on date, the composition of the Board of Directors is as under:

In terms of Section 161 of the Act, the directors who were appointed as additional directors on the Board of the Company will hold office upto the date of ensuing annual general meeting of the Company. Pursuant to the resolution plan as approved by the Honble NCLT, Chennai bench, the board of directors has recommended the appointment of all the directors in ensuing annual general meeting and the details of all the directors seeking appointment at the 33th Annual General Meeting is annexed to the notice of the ensuing annual general meeting.

Director retiring by rotation:

Since, as a part of implementation of the approved resolution plan, the erstwhile board of directors of the Company were dissolved and new board of directors were reconstituted with effect from April 10, 2023, no director will retire by rotation at the ensuing annual general meeting of the Company pursuant to Section 152 and other applicable provisions of the Act.

Independent directors and their declarations:

During the CIRP period, Mr. Ravi Devarajan (DIN: 00577682), Mr. Prabhakar Rao Udipi (DIN: 01523985) and Mr. Srinivasan Madabusi Thozhur (DIN: 00516762) were the independent directors of the Company. However, during such period, the powers of the board of directors stood suspended and the management of the affairs of the Company was vested with the resolution professional. As a part of implementation of the resolution plan, the erstwhile board of directors were dissolved and all the directors of erstwhile board of directors were deemed to have resigned on January 5, 2023. Mrs. Lakshmiprabha Kasiraman (DIN: 02885912) was an Independent Director of the Reconstituted Board with effect from January 5, 2023. She was recategorized as Non-Executive Non-Independent Director with effect from August 14, 2023. Mr. Ramamurthy Natarajan (DIN: 09213226) and Mr. Ramaiyan Navamurthy (DIN: 10209589) are appointed as Additional Directors (Non-Executive and Independent Directors) on the Board on August 14, 2023. They have given declarations under Section 149(7) of the Act, that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. In terms of Regulation 25(8) of the Listing Regulations, they 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 independent judgement and without any external influence. In terms of Section 150 of the Act read with the rules made there under, the Company has received confirmation from all the independent directors, that they are registered on the independent directors database maintained by the Indian Institute of Corporate Affairs (“IICA”). Pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, all the independent directors of the Company are exempted from taking online proficiency self-assessment test conducted by IICA. Also, all the independent directors have confirmed that are complying with the code for independent directors as prescribed in Schedule IV to the Act. In the opinion of the Board, the independent directors possess the requisite expertise, skill, experience and knowledge and are persons of integrity and repute. They fulfil the conditions specified in the Act as well as the rules made thereunder and are independent of the management.

b) Key managerial personnel:

The following changes took place in the office of key managerial personnel of the Company during the financial year ended March 31, 2023 and up to the date of this report: During the year under review, Mr. Raghunathan Kettandapatti Chakravarthy (DIN: 00007605) was holding office as Managing Director.

Pursuant to the implementation of the approved resolution plan, Mr. Raghunathan Kettandapatti Chakravarthy (DIN: 00007605), being Managing Director of the erstwhile board, deemed to have resigned on January 5, 2023. Further, on April 10, 2023, Mr. Samiayya Arularasan (DIN: 09407539) and Mr. Nangavaram Mahadevan Ranganathan (DIN: 06377402) was appointed on the Reconstituted Board as Additional Director. Mr. Nangavaram Mahadevan Ranganathan (DIN: 06377402) was also appointed as Chief Financial Officer of the Company with effect from April 10, 2023. Mrs. Madesh Mamtha (ICSI Membership No. A70649) was appointed as Company Secretary and Compliance Officer with effect from May 11, 2023.

Performance evaluation of the Board, its committees and individual directors:

The powers of the erstwhile board of directors of the Company were suspended during the CIRP with effect from April 15, 2021 and such powers were vested with the interim resolution professional/resolution professional. As a part of implementation of the resolution plan approved by the Honble NCLT, Chennai bench vide its order dated April 25, 2022, the erstwhile board of directors of the Company were dissolved and new board of directors were constituted on January 05, 2023. Therefore, being very short period, it was not feasible for the new board of directors to carry out the performance evaluation of Board, its committees and individual directors during the remaining period of year under review after re-constitution.

Policy on directors appointment and remuneration:

In terms of provisions of Section 178 of the Act and applicable provisions of the Listing Regulations, the Company had, prior to commencement of CIRP, put in place a policy on directors appointment and remuneration. The policy has been posted on the website of the Company.

Familiarisation programme for independent directors:

The details of the familiarisation programme for independent directors are given in the corporate governance report, which forms an integral part of this annual report.

Risk management:

The Company had, prior to the commencement of the CIRP, put in place a risk management policy, for monitoring, mitigating, reporting and effectively managing the risks that are envisaged on the conduct of business wherein all material risks faced by the Company are identified and assessed.

Vigil Mechanism / Whistleblower policy:

The Company had, prior to the commencement of the CIRP process, put in place a vigil mechanism/ whistleblower policy. The details of the policy as well as establishment of vigil mechanism are provided in the corporate governance report and are also available on the website of the Company.

Corporate social responsibility:

The Company had, prior to the commencement of the CIRP, put in place a corporate social responsibility (“CSR”) policy and it is also available on the website of the Company. The terms of reference of the CSR committee are detailed in the corporate governance report. Pursuant to Section 135 of the Act and rules and regulations made there under, it is required to spend two percent of the average net profit of the Company for three immediately preceding financial years. As the average net profit of the Company during previous three financial years was negative, the Company was not required to spend any amount for the CSR purpose during the year under review. Accordingly, the annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is not applicable to the Company.

Subsidiaries, joint ventures or associate companies:

As per the resolution plan approved by the Honble NCLT vide its order dated April 25, 2022, the Company did not have subsidiary companies.

Adequacy of internal financial control system with reference to financial statement:

During the CIRP period, interim resolution professional/ resolution professional was entrusted with the management of the affairs of the Company. The directors of the Reconstituted Board were entrusted with the management of the affairs of the Company from January 05, 2023. The Reconstituted Board reviewed the internal control system of the Company and has initiated steps to implement the robust internal control framework including standard operating procedures. The Reconstituted Board are of the opinion that based on the knowledge/ information gained by them about affairs of the Company in a limited period of time from records of the Company, the Company has effective internal financial control systems reference to financial statement.

Auditors and their reports: Statutory auditor:

The Board of Directors at their meeting held on April 10, 2023, had appointed M/s Murali & Venkat, Chartered Accountants (Firm registration number: 0021625) as the statutory auditors of the Company, to hold office till the conclusion of the Next Annual General Meeting of the Company. The Statutory auditors have furnished their consent for appointment as the statutory auditor of the Company along with a certificate, pursuant to Section 139(1) and 141 of the Act, stating that they are not disqualified to act as auditor and that their proposed appointment satisfies the terms and conditions prescribed under the Act. As they are eligible and have expressed their willingness to act as statutory auditor of the Company, the Reconstituted Board, has recommended, the appointment of M/s. Murali & Venkat, Chartered Accountants, as the statutory auditor for a period of 5 (Five) years from the conclusion of ensuing Annual General Meeting till the conclusion of 38th Annual General Meeting.

Statutory auditors report:

No qualifications, reservations, adverse remarks or disclaimer were made by the statutory auditor in their report on the financial statement for the financial year ended March 31, 2023.

Secretarial auditor:

M/s KRA & Associates, Company Secretaries, were appointed as secretarial auditor to conduct the secretarial audit of the Company for the financial year ended March 31, 2023, as required under Section 204 of the Act. The secretarial audit report of the Company, are annexed as Annexure II and forms an integral part of this report.

Secretarial auditors report:

The secretarial audit report for the financial year ended March 31, 2023 does not contain any qualification, reservation, adverse remark or disclaimer.

Cost records and cost audit:

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.

Reporting of frauds by auditors:

During the year under review, neither the statutory auditor nor the secretarial auditor has reported to the resolution professional/ audit committee (post completion of CIRP), under Section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the boards report.

Particulars of loan, guarantee or investment under Section 186 of the Companies Act, 2013:

Loans, guarantees and investments covered under Section 186 of the Act form part of the notes to the financial statement provided in this annual report.

Deposits:

The Company did not accept any deposits within the meaning of the provisions of Chapter V (Acceptance of deposits by companies) of the Act during the year under review. Neither any deposit is unclaimed or unpaid during the financial year ended March 2023.

Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pertaining to conservation of energy and technology absorption, as required under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, are not applicable to the Company. Further, during the year under review, there was no transaction involving foreign exchange earnings and outgo.

Secretarial standards:

The Company complies with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company had, prior to the commencement of CIRP, in place an anti-sexual harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. As per the said policy, the Company has an internal complaints committee to redress complaints received regarding sexual harassment. The Company did not receive any sexual harassment complaints during the year under review.

Particulars of contracts or arrangement with related parties:

All the related party transactions entered during the year under review were in ordinary course of the business and at arms length basis and there was no material related party transaction, i.e., transaction with a related party exceeding Rupees 1000 crore or 10% of the annual consolidated turnover, whichever is lower, as per the last audited financial statement of the Company. Since, the disclosure in Form AOC- 2 is required to be made only of the related party transactions or arrangements that were not at arms length basis or the material related party transactions that were at arms length basis in accordance with the Section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable. The members may refer the financial statement which sets out the related party disclosures pursuant to Ind AS.

Particulars of employees and remuneration:

There were no employees who were employed throughout the year. The information required under Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed as Annexure I and forms an integral part of this report.

Significant and material orders passed by the regulators or courts or tribunals impacting going concerns status and Companys operations in future

The Honble NCLT under Section 31 of the IBC, vide its order dated April 25, 2022 approved the resolution plan submitted by Samiayya Arularasan. Except this, no other significant or material orders were passed by the regulators or courts or tribunals or statutory and quasi-judicial body impacting the going concern status and Companys operations in future.

Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year

No applications have been made and no proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016 during the year under review.

Details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof

There was no one-time settlement done by the Company and hence the details of difference in valuation arising between such one-time settlement and the loan taken from the banks or financial institutions do not arise.

Directors responsibility statement:

During the CIRP period, interim resolution professional/ resolution professional was entrusted with the management of the affairs of the Company. The directors of the Reconstituted Board were entrusted with the management of the affairs of the Company with effect from January 05, 2023. To the best of knowledge and beliefs, the directors of the Reconstituted Board make the following statements in terms of Section 134(3)(c) of the Act: i. in the preparation of the annual accounts for the financial year ended on March 31, 2023, the applicable accounting standards had been followed and no material departures have been made from the same; ii. such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the March 31, 2023 and of the profit / loss of the Company for the year under review; iii. the proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. the annual accounts of the Company have been prepared on a going concern basis; v. the internal financial controls were in place and such internal financial controls were adequate and were operating effectively; and vi. the Reconstituted Board has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Other disclosures:

No disclosure or reporting is required in respect of the following items as there were no transactions on these items, during the year under review: a. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise; b. The Company has not issued sweat equity shares; c. The Company has not implemented any employee stock option scheme;

d. None of the directors of the Reconstituted Board including additional directors in the capacity of whole-time directors received any remuneration or commission from Companys holding company or from any subsidiaries of the Company; e. There was no revision made in financial statement or the directors report of the Company; f. There has been no change in the nature of business of the Company; g. The Company has not obtained any credit rating of its securities;

Acknowledgements

The Reconstituted Board acknowledge and thanks all the stakeholders of the Company including its employees, customers, shareholders, bankers, vendors, lenders, regulatory and government authorities and stock exchanges for their cooperation and support and look forward to their continued support in future.

ANNEXURE I TO THE BOARDS REPORT

Particulars pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended

a) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year

The CIRP was initiated in respect of the Company under the provisions of the IBC by an order of the Honble NCLT with effect from April 25, 2022. During the CIRP, the powers of the board of directors stood suspended and the management of the affairs of the Company was vested with the interim resolution professional/resolution professional. No remuneration has been paid to any director during the CIRP period.

As a part of implementation of the resolution plan approved by the Honble NCLT vide its order dated April 25, 2022, the erstwhile board of directors of the Company were replaced by the new board of directors on January 05, 2023.

b) The percentage increase in remuneration of each director, chief financial officer, chief executive officer, company secretary or manager, if any, in the financial year

Not Applicable

c) The percentage increase in the median remuneration of employees in the financial year

Not Applicable

d) The number of permanent employees on the rolls of Company

Nil

e) Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

During the financial year 2022-23, there was no increase in salary of any employee.

f) Affirmation that the remuneration is as per the remuneration policy of the Company

It is hereby affirmed that the remuneration paid is as per the remuneration policy of the Company.

ANNEXURE II SECRETARIAL AUDIT REPORT

Form No. MR-3

For the financial year ended March 31, 2023

[Pursuant to section 204(1) of the Companies Act, 2013 and rule no.9 of the Companies (Appointment and Remuneration of Personnel) Rules, 2014]

To The Members SIP Industries Limited

Module 28,2nd Floor, Block 1, SIDCO Electronic Complex, Thiru-Vi-Ka Industrial Estate, Guindy, Chennai 600032.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by SIP Industries Limited (hereinafter called “the Company”). Secretarial audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing our opinion thereon. Based on our verification of the Companys books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company, during the financial year ended on March 31, 2023 (“Audit Period”), was revived through a Resolution Plan approved by the Honourable National Company Law Tribunal, Chennai Bench Order dated 25^th April, 2022. The Company is still in the stage of reviving and is yet to start any business. We further report that the Companys shares are suspended due to Penal reasons & Procedural reasons. We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2023 according to the provisions of:

We further report that our audit is subjected only to verifying adequacy of systems and procedures that are in place for ensuring proper compliance by the Company and we are not responsible for any lapses in those compliances on the part of the Company. This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.

ANNEXURE A TO THE SECRETARIAL AUDIT REPORT

Our report of even date is to be read along with this letter.