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 on October 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 reserved for order.
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 330 lakhs (loss incurred during the previous year ended on March 31, 2023 was Rupees 344 lakhs).
The accumulated losses as on March 31,2024 amounted to Rupees 55312 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 September 2016 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 2024 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, 2024
The income earned and expenses incurred during CIRP period for the year ended 31st March, 2024 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 corporate debtor has been informed by the Tata YodogawaLimited Provident Fund Trust that the Trust has incurred accumulated losses of ?92,32,723/-for the year ended 31st March 2019 to 31st March 2023 due to shortfall in the earnings 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 which is reserved for order.
(iii) Financial Performance: The Company has incurred a loss of Rupees 330 lakhs during the year ended 31st March, 2024 (Rupees 344 lakhs during the year ended 31st March, 2023) and accumulated losses as on reporting date amounting to Rupees 55312 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 "forwardlooking 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 23, 2024 | 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 |
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