Tayo Rolls Limited (TAYO), a subsidiary of Tata Steel Limited since
December, 2008, was promoted in collaboration with Yodogawa Steel Works, Japan and Nissho
Iwai Corporation of Japan for production of Cast Iron and Cast Steel Rolls for
metallurgical industries. Other products include Forged Rolls, Engineering Forgings and
Ingots. Tayo Rolls Limited, formerly Tata Yodogawa Limited was incorporated in 1968 and
started its operations then.
The Company has suspended its operations progressively since May 2016.
Operations have not been resumed in the current financial year. Although, during the
Financial Year 2019-20, Corporate Insolvency Resolution Process (CIRP) was commenced
against the company vide an order passed by the Honble National Company Law Tribunal
(NCLT), Kolkata Bench dated April 5, 2019 under the provisions of the Insolvency and
Bankruptcy Code 2016 ("Code / IBC"),
BUSINESS REVIEW AND OUTLOOK:
Several initiatives in the construction, infrastructure and automotive
space have forward and backward linkages with the steel industry. These links will
catalyse the countrys total steel demand in the next fiscal. The fortune of the
steel industry is proportionate to the swings in other sectors such as automobile,
infrastructure, consumer durable, sectors that generate high steel demand.
Availability of raw materials and cheap labour makes this industry cost
effective. The country produces its own iron ore as well. The countrys steel demand
has been on a rise.
However the country witnessed unprecedented growth rates with a slowing
global economy and also to the effect of pandemic COVID-19. Uncertainty over the trade
environment and volatility in the financial markets could pose downside risks to this
forecast.
Domestic steel demand will remain the strongest in Asia but result in
slow-to mid-single digit growth, as weak auto and manufacturing demand offset demand
growth in the affordable housing, infrastructure sectors and construction industries.
On the contrary, the domestic Roll industry outlook in India is not
very encouraging since the industry is passing through a crisis situation due to
continuing closure of operations of two primary Roll Manufacturing Companies namely TAYO
Rolls Limited (TAYO) and Gontermann Piepers India Limited (GPI). The present domestic roll
industry is unable to meet the demand of the growing Steel Industry with respect to
quality and delivery.
In view of this, Indian Roll Industry continues to be dominated by
imports largely from China and Russia besides smaller imports from Japan, Korea and the
European countries due to domestic roll industrys inability to produce required
quality rolls at competitive prices.
OPPORTUNITIES AND THREATS:
The company ("Tayo Rolls Limited") has been a moderately
profitable company since inception, manufacturing Cast Rolls for hot rolling. Since 2000,
the profits from the Cast Roll business have been under pressure. At the same time, the
cold rolling operations in India was gathering pace. In a bid to diversify the product
portfolio, Tayo embarked on the forged roll project. The project faced time and cost
overruns due to the global economic crisis in 2008.
Since 2009, the Company has been making losses mainly due to delay in
the Forged Roll Project, subdued demand growth, pricing challenges, and consequent
liquidity crunch. Poor quality performance due to poor workmanship also had a severe
adverse effect on the financial performance.
The uncertainties in trade environment, over-capacity situation in the
Roll and Forging industries, delayed technology absorption for next generation rolls,
severe cash constraints and continued cash loss etc have compelled the Company to write
down value of its assets, which has eroded its net worth as on 31.12.2015. Based on the
negative net-worth, the Company has suspended its operations progressively since May 2016.
The Operations have not been resumed in the current financial year. Although, during the
last financial year, Corporate Insolvency Resolution Process (CIRP) was commenced against
the company vide an order passed by the Honble National Company Law Tribunal (NCLT),
Kolkata Bench dated April 5, 2019 under the provisions of the Insolvency and Bankruptcy
Code 2016 ("Code / IBC"), pursuant thereto, on the same date i.e. April 5, 2019
Honble National Company Law Tribunal (NCLT), Kolkata Bench appointed Mrs. Vinita
Agrawal as Interim Resolution Professional (IRP) who was subsequently confirmed as
Resolution Professional (RP) by Committee of Creditors (COC), constituted under IBC in
their meeting held on May 3,2019. Mrs. Vinita Agrawal, in her capacity as RP, has taken
control and custody of the management and operations of the company with effect from April
5, 2019.
Consequent to a petition filed by COC, the Honble National
Company Law Tribunal (NCLT), Kolkata Bench passed an order onOctober 30, 2019 and
appointed Mr. Anish Agarwal (IP Registration No.: IBBI/IPA-001/IP-P-01497/2018-2019/12256)
as Resolution Professional in place of Mrs. Vinita Agrawal.
Jharkhand Bijli Vitran Nigam Limited ( JBVNL) has submitted the
Resolution Plan as per the terms and condition as specified in Request for Resolution Plan
and Form G within the time limit to resolve this company and the same was approved by
Committee of Creditors ( COC) in their 12th Committee of Creditors meeting held on
February 21, 2020 and declared as passed with 92.45 % of voting shares.
Subsequently, on February 24, 2020 the Application for Approval of
Resolution Plan under section 30(6) and section 31(1) of the Insolvency and Bankruptcy
Code, 2016 read with regulation 39 of IBBI (Insolvency Resolution Process For Corporate
Person)Regulation, 2016 was filed by the Resolution Professional with Honorable National
Company Law Tribunal (NCLT) Kolkata for its approval which is still awaited.
SEGMENTWISE PERFORMANCE:
The segment wise result is not applicable as the operations have
remained suspended.
RISK AND CONCERNS:
The Company has not adopted any Risk Management policy and framework
pursuant to commencement of the CIR process as the powers of the board of directors stand
suspended.
INTERNAL CONTROL AND ADEQUACY:
The Corporate Insolvency Resolution Process (CIRP) had commenced
against the Company vide an order passed by Honorable NCLT Kolkata dated 5th April 2019.
Pursuant to this order, the powers of the Board of Directors stood suspended and was
exercised by Mrs. Vinita Agrawal, the Interim Resolution Professional (IRP) appointed by
the Honorable NCLT who was consequently confirmed to continue as the Resolution
Professional (RP) by the Committee of Creditors (COC). Consequent to a petition filed by
COC, the Honorable NCLT, Kolkata , passed an order on 30th October, 2019 and appointed Mr.
Anish Agarwal (IP Registration No.: IBBI/IPA- 001/IP-P-01497/2018-2019/12256) as
Resolution Professional in place of Mrs. Vinita Agrawal ( the erstwhile Resolution
Professional ).
The Company had already suspended its operations gradually since May,
2016 and the same continued during the current year as well. On account of ongoing CIRP
and suspended operations, no activities other than those relating to insolvency resolution
process were undertaken by the Company during the year as per the provisions of the
Insolvency and Bankruptcy Code (IBC), 2016. Accordingly, the control policies relating to
the normal operations of the company were not required and therefore were not adopted and
performed except for those necessary under the provisions of the IBC which commensurate
with the size, nature and complexity of the activities of the Company.
FINANCIAL PERFORMANCE
During the year, the Company recorded a net loss of Rupees 344.36 lakhs
(loss incurred during the previous year ended on March 31, 2022 was Rupees 347.40 lakhs).
The accumulated losses as on March 31, 2023 amounted to Rupees 54981.18
lakhs. The Net worth of the Company has already been eroded and the Companys current
liabilities exceeded its current assets.
The analysis of major items of the financial statements is given below:
(i) Employee Cost and benefits expense:
The operations of the Company have remained suspended since
September2016 and thereafter CIRP commenced since 5th April 2019. The claim of employees
and workers (who became the members of CoC) have already been admitted by the Resolution
Professional. Since the inception of CIRP and because of continued suspension of
operations, the services of workmen were not availed. Therefore, no provision of employee
cost and benefits have been made for the year ended 31st March 2023 and such provisions
cannot be included in the CIRP cost as per IBC 2016. Further, the financials have not been
prepared on the basis of going concern.
(ii) Finance Cost: The Company has an outstanding unsecured
borrowing of Rupees 6700 lakhs repayable / due to related party @ 7% per annum. However,
the CIRP has commenced since 5th April 2019 and the amount is due to related party, its
priority for payment ranks last as per Waterfall Mechanism in IBC 2016 and is unlikely to
be paid in view of the inadequate availability of the assets of the Company. Accordingly,
no interest on the borrowing has been shown in the financial statement for the year ended
31st March, 2023
The income earned and expenses incurred during CIRP period for the year
ended 31st March,2023 have not been considered in the Financial Statement because these
CIRP expenditures are payable by Resolution Applicant as per Section 30(2) or in case of
liquidation the same will be paid from the liquidation proceeds as per Section 53 of the
IBC, 2016.
Further, the Company received email dated 06th April 2022 from
Employees Provident Fund Organisation, Regional Office, Jamshedpur enquiring whether
the accumulated losses till date have been made good or not.It has been informed to the
Regional Office that Tata Yodogawa Provident Fund Trust has incurred accumulated losses of
Rupees 75,09,643.00 for the year ended 31st March 2019 to 31st March 2022 due to shortfall
in the earning of the Trust. As per the byelaws of the Trust, such loss/shortfall has to
be paid by the company to Trust. However, as the CIRP has commenced since 5th April 2019
and the corresponding expense and liability of the said amount has not been provided for
in the books of the company. The said shortfall amount will be paid by the Resolution
Applicant on approval of Resolution Plan by Honorable NCLT, Kolkata.
(iii) Financial Performance: The Company has incurred a loss of
Rupees 344.36 lakhs during the year ended 31st March, 2023 (Rupees 347.40 lakhs during the
year ended 31st March, 2022) and accumulated losses as on reporting date amounting to
Rupees 54981.18 lakh.
(iv) The net worth of the Company has already been eroded and the
Companys current liabilities exceeded its current assets.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis describing the
Companys estimates and expectations may be "forward- looking statements"
within the meaning of applicable securities laws and regulations. Actual
results/performance could differ materially from those expressed or implied
|
For Tayo Rolls Limited |
| May 25, 2023 |
Under Corporate Insolvency Resolution Process (CIRP) |
| Registered Office: |
|
| 3, CH Area (NE), Road No.11, Bistupur, |
Anish Agarwal |
| Jamshedpur- 831 001 |
Resolution Professional |
|
IBBI/IPA-001/IP-P-01497/2018 -2019/12256 |
+91-9892691696
