richa industries ltd Management discussions

Forward Looking Statements

This report contains forward-looking statements, which may be identified by the use of words like plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar connotation. All statements that address expectations or projections about the future, including, but not limited to statements about the Companys strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent developments, information or events. The statement of the management must be read in the light of the fact that the Committee of Creditor has passed a resolution to liquidate the Company.

Any reference to Director or Board of Directors, in this report shall be construed as Resolution Professional acting under the sec 17(1)(b) r.w. sec. 17(2)(e).

Corporate Overview

Richa Industries Limited is a leading manufacturing company operational in PreEngineered Building, EPC (Engineering, Procurement & Construction) and Textile sectors. An ISO 9001:2008 certified company; Richa Industries Limited is listed at Bombay Stock Exchange. The strict quality control measures, adoption of most modern and state-of-the art technology, innovative concepts and adhering to strict delivery schedules have made Richa today the most trusted name in the industry.

Overview of the Economy

In March 2020, the World Health Organization declared COVID-19 a global pandemic. Consequent to this, Government of India declared a nation-wide lockdown from March 24, 2020. Subsequently, the nation-wide lockdown was lifted by the Government of India, but regional lockdowns continue to be implemented in areas with significant number of COVID-19 cases. These lockdowns have caused major disruptions in the supply chains and shrunk the economy considerably. The economy is expected to pick up growth pace in the third quarter of FY2021-22.

Industry Overview

• Textile Industry

Opportunities & Challenges

The year 2020-21 has been the most challenging year in our lifetimes. What started as a promising year for our industry quickly turned into a difficult one. COVID-19 pandemic brought the entire world to a standstill, equitably affecting markets and supply chains globally. Consumer purchase of textile and apparel were hit badly due to the global lockdowns and economic recession.

The global apparel consumption is estimated to have shrunk by 22% in 2020. However, 2021 looks brighter given the onset of vaccination drives, growth in e-commerce sales of apparel, and resumption of global supply chains

Risk & Concerns

The industry faced a complete shutdown for around 2-3 months, while a few manufacturers who dedicated their production systems for PPE manufacturing were permitted to function. However, most of the units operated at suboptimal utilization levels for next several months.

Outlook

Richa looking for greater opportunities with the emerging market and the outlook of this company is mainly focussed on the growth and increases its customer base and to stay relevant to the changing consumer

Construction & Engineering (Pre Engineered Building) Industry

The PEB plant of the Company is not functioning since January, 2019.

The key issues and challenges for Construction & Engineering Industry (PEB)

PEB industry has grown leaps & bounds over the last two decades and the industry consisting of top organized players is maturing to take it to the next level of growth trajectory. The industry is overcoming many challenges by continuous knowledge sharing across seminars, conference, industry forums, colleges and education curriculum, among others, to the target audience thereby increasing the popularity. A major challenge are prices of raw material - coils & plates which are highly volatile in nature.

Future outlook of this Industry

The manufacturing unit of the company has remained shut since January, 2019 due to paucity of working capital finance.

Financial Performance

The Companys Standalone turnover for the current financial year is Rs 35.06 crores as compared to Rs 42.61 crores in previous financial year. Loss before tax is Rs 46.19 Crore for the current financial year as compared to that of loss before tax for previous financial year of Rs 57.32 crores. Loss after tax for the current financial year stood at Rs 46.19 crores as compared to loss before tax Rs 57.32 crores in the previous financial year.

The Company consolidated turnover for the current financial year is Rs 35.06 crores as compared to Rs 42.61 crores in the previous financial year. Loss before tax is Rs 46.22 crores for current financial year as compared to that of previous financial year of loss before tax of Rs 57.27 crores. Loss after tax for the current financial year stood at Rs 46.24 as compared to loss after tax Rs 57.27 crores in the previous financial year.

The Basic and diluted Earnings per share computed in accordance with the Accounting Standard-20 issued by the Institute of Chartered Accountants of India was Rs -19.72 per share respectively as against Rs -24..46 per share during the previous year.

Internal Control Systems and their adequacy

Richa Industries Limited has a proper and adequate system of internal controls to ensure that all the assets are safeguarded and protected against loss from unauthorized use or disposition. The Company internal controls are supplemented by an extensive programmed and its review by management and documented policies, guidelines and procedures.

The Company maintains a system of internal control designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations as applicable in the various jurisdictions in which the Company operates.

After the commencement of CIRP many of the Companys KMPs and other functional heads, employees have resigned. This has reduced the effectiveness of various internal control, which were earlier implemented through segregation of duties and responsibilities. The Resolution professional has however implemented controls to ensure protection and assets of the company.

Health Safety and Environment

The Company is continuously working for the safety of the employees and also to minimize the environmental impact on its operations. The Company continuously provides and maintains best safety measures in the plants and also equipped with best pollution control with the best emissions norms. Regular medical examination of the employees is the integral part of the Company policy. All employees are obliged to ensure that they fully understand all policies and do fully comply with the requirements. The Company believes and ensures that there should be no injuries and incidents in their plants and taken OHSAS to ensure further safety & health of our employees & associates.

CORPORATE INSOLVENCY RESOLUTION PROCESS

The Corporate Insolvency Resolution Process ("CIRP") has been initiated, on a petition filed by Tata Bluescope Steel Limited against Richa Industries Limited ("the Company"), which has been admitted vide an Order dated 18-12-2018 ("Insolvency Commencement Date") by the Honble National Company Law Tribunal ("NCLT"), Chandigarh Bench, under the provisions of the Insolvency and Bankruptcy Code, 2016 ("the Code"). Mr. Arvind Kumar, IP Registration No. IBBI/IPA-001 /IP-P00178/2017-2018/10357 has been appointed as Interim Resolution Professional ("IRP") to manage affairs of the Company in accordance with the provisions of the Code and thereafter appointed as the Resolution Professional ("RP") by the committee of creditors ("COC") of the Company in the meeting held on January 17, 2019 under the provisions of the Code. Pursuant to the Honble NCLT Order for commencement of the CIRP and in line with the Provisions of the Code, the power of the Board of Directors stands suspended and same is being exercised by RP in terms of the provisions of Section 17 & 20 of the Code. Further vide an Order dated June 7, 2019, Honble NCLT has extended the CIRP period for a further period of 90 days beyond the initial a statutory period of 180 days. Pursuant to the non-approval of resolution plan, the COC in its meeting held on 03.09.2019 has passed a resolution for liquidation of Company and directed the Resolution Professional to file an application, for liquidation before AA (Adjudicating Authority). Consequent to which, Mr. Arvind kumar has filed an application for liquidation on 12^thSeptember 2019 which is pending for approval by AA.

	For Richa Industries Limited
Date: 14.08.2021	(Under CIRP)
Place: Faridabad
	Arvind Kumar
	Resolution Professional
	Regn No: IBBI/IPA-001/IP-P00178/2017-18/10357