sip industries ltd share price Management discussions

Management Discussion and Analysis as required under Regulation 34 of SEBI (LODR)

Regulations, 2015 read with Schedule V of the said Regulations, forms part of this Boards

Report as follows:

Corporate Insolvency Resolution Process

The Honble National Company Law Tribunal, Chennai Bench (“NCLT”), had admitted an application filed by an operational creditor under Section 31 of the Insolvency and

Bankruptcy Code, 2016 (“IBC”) for Approval of Resolution Plan for SIP Industries Limited (“Company”). Mr. Porselvam Govindaswamy (IBBI Registration no. IBBI/IPA-002/IP-N00427/2017-2018/11229) was appointed as the interim resolution professional to manage the affairs of the Company in accordance with the provisions of the IBC. Mrs. Chitra Perinkulam Ragavan (IBBI Registration No. IBBI/IPA-002/IP- N00720/2019- 2020/12558) was appointed as the resolution professional (“RP”) of the Company, as approved at the Committee of Creditors (“CoC”), which was confirmed by the Honble NCLT vide its order dated April 25, 2022. In view of the tendency of the CIRP, the powers of the board of directors stood suspended and the management of the affairs of the Company was vested with the RP.

In furtherance to the above, the resolution plan submitted by Mr. Samiayya Arularasan (“Resolution Applicant”) was approved by the CoC of the Company. The RP submitted the CoC approved resolution plan to the Honble NCLT for its approval and the NCLT vide its order dated April 25, 2022 approved the resolution plan, submitted by the Resolution Applicant under Section 31 of the IBC. In accordance with the provisions of the IBC and the NCLT order, the approved resolution plan is binding on the Company and other stakeholders involved in the resolution plan.

As per the approved resolution plan, during the period between the NCLT approval date (as defined in the approved resolution plan) and the effective date (as defined in the approved resolution plan) (“Interim Period”), a monitoring committee was constituted (“Monitoring Committee”) comprising of the RP, 2 (two) representatives of the approving financial creditors and 2 (two) representatives of the Resolution Applicant. During the Interim Period, the powers of the board of directors continued to remain suspended and the Monitoring Committee managed the affairs of the Company as a going concern and supervised the implementation of the resolution plan.

The Monitoring Committee, at its closing meeting held on January 05, 2023, inter-alia, reconstituted the board of directors of the Company (“Reconstituted Board” or “Board”) and erstwhile board of directors were dissolved and all the directors of the erstwhile board of directors were deemed to have resigned. Further upon conclusion of the closing meeting, the Monitoring Committee stood dissolved.

Pursuant to and in accordance with the implementation of the approved resolution plan, the Resolution Applicant has acquired 95% of the paid-up share capital of the Company. The Resolution Applicant is the new promoter of the Company.

The Reconstituted Board is submitting this report in compliance with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 (“Listing Regulations”).

Forward looking statement

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements can 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 statements, on the basis of any subsequent developments, information or events.

1. Industry structure and developments

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.

2. Opportunities and threats

The competition from existing and new entrants and managing the geographical / capacity expansion present the Company with new challenges. The Company is making all efforts to revive the business and hopes for good results in the current year.

3. Segment wise or product-wise performance

The Companys entire business is planned to be from agricultural activities. There are no other primary / secondary segments in the Companys business

4. Outlook

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 replaced with the new board of directors. The new board of directors were entrusted with the management of the affairs of the Company from January 05, 2023. This may have a positive impact on the Companys long-term business and profitability.

5. Risks and concerns

In any business, risks and prospects are inseparable. As a responsible management, the Companys principal endeavor is to maximize returns. The Company continues to take all steps necessary to minimize losses through detailed studies and interaction with experts.

6. Internal control systems and their adequacy

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.

7. Key financial ratios

There is no significant change (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, as per the standalone financial statement of the Company.

8. Details of any change in return on net worth as compared to the immediately previous financial year

By virtue of the Honble NCLT order dated April 25, 2022 and approved resolution plan, amount payable to secured financial creditors and other creditors have become NIL, net-worth has improved and hence there is change in return on net worth.

9. Cautionary statement

Statements made in this report, particularly those which relate to management discussion and analysis, describing the Companys objectives, projections, estimates and expectations may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results might vary materially from those either expressed or implied in the statement depending on the circumstances.