sm dyechem ltd Management discussions

BIFR/AAIFR PROCEEDINGS & OUTLOOK

The company was under the scheme of rehabilitation (the Scheme) sanctioned by erstwhile The Board for Industrial and Financial Reconstruction (BIFR) as amended from time to time As per directions of BIFR a Modified Draft Rehabilitation Scheme (MDRS) appraised by Industrial bank of India (IDBI0, the Operating agency, was under consideration for approval by BIFR.

Thereafter, in view of the notification dated 25th November, 2016, the SICA Act, 1985 was repealed and the proceedings pending before the Honble BIFR were required to be transferred before the Honble National Company Law Tribunal (NCLT) in accordance with the provisions of the SICA Repeal Act, 2003. Accordingly, the company has filed a reference/application before the NCLT Bench at Mumbai seeking approval of the bench for sanction udner the provisions of insolvency and Bankruptcy Code, 2016 read with insolvency and Bankruptcy Code (removal of difficulties) order 2017 of MDRs which was pending before the erstwhile BIFR. The reference/application filed before NCLT, Mumbai is pending for consideration/approval.

RECONSTRUCTION :

In terms of the Scheme, the promoters of the Company have undertaken to turn around the company by augmenting necessary resources and venturing into various beneficial business opportunities. Substantial payments have been made towards the payments detailed in the Scheme.

The Board in coordination with promoters is endeavoring to complete the residual requirements of the Scheme. However, the Board is of the opinion that the existing business domains have became very competitive and hence widening the scope of business domains have became imperative in pursuance thereof, the Company is constantly reviewing opportunities for expansion of its business operations either directly or through its subsidiaries/joint ventures/associate companies/bodies corporate.

The sanctioned scheme envisaged deployment of resources to meet the capital expenditure, payments to unsecured creditors, payment of sales tax liabilities, funding of additional capital and other reliefs and concessions from various governmental, quasi governmental and other agencies and parties. Though the sanctioned scheme has been substantially implemented, however due to non-grant of the reliefs by the various authorities coupled with financial difficulties, continued to be faced by the Company, the required resources could not be mobilized by the Promoters and consequently the scheme sanctioned by BIFR could not be implemented in full.

In order to meet the residual liabilities of the Company and also to workout additional business domain, the Company has identified a strategic investor/co-promoter who had agreed to bring in the required funds in the form of unsecured loan.

In addition the strategic investor has also identified a new business domain in the realty Sector. The Company in consultation with the strategic investor has taken substantial steps in finalizing the new activity.

The Board is hopeful that this addition of business platform would enable the Company in its efforts in regaining the glory of the company.

In terms of the understanding with the strategic investors the Promoters of the Company have divested 23.94% of their shareholding in the Company and the particulars of such acquisition have been intimated to all regulatory authorities and to BIFR/IDBI.

Consequent to the preferential allotment made in pursuance to the BIFR scheme, the equity shareholding held by M/s. Sai Ganesh Prperties Pvt Ltd ("Promoter company) exceeds 50% of the equity share capital of the Company, as such the Company has become a subsidiary of M/s Sai Ganesh Properties Pvt Ltd.

The Board would update the members about the progress in this regard in due course.

RISKS AND CONCERN :

As reported earlier, the Company is a sick company under the BIFR Act and is exposed to the financial risk.

FINANCIAL & OPERATIONAL PERFORMANCE :

During the year under review, the Company saw a fall in its overall performance. The Company has incurred losses of Rs.13,853 thousand as against Rs.6,422 thousand in the previous year. The Company has deployed funds in new business ventures during the year as part of the Rehabilitation Scheme.

CAUTIONARY STATEMENT :

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be considered to be forward looking statements and actual results could differ materially from those expressed or implied. Important factors which could make a significant difference to the companys operations include downtrend in the pharmaceutical sector, demand supply conditions, market prices, input components costs and availability, changes in government regulations and tax laws besides other factors such as litigation over which the company.