Videocon Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to an application filed before the Honble National Company Law Tribunal, Mumbai (“NCLT” / “Adjudicating Authority”) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC” / “the Code”) against Videocon Industries Limited (“Corporate Debtor”) / “the Company”), the Adjudicating Authority had admitted the application for the initiation of the corporate insolvency resolution process (“CIRP”) of the Corporate Debtor vide an order dated June 6, 2018 and appointed Mr. Anuj Jain as the insolvency resolution professional.

Thereafter, separate applications were filed by State Bank of India (on behalf of all the financial creditors) and Mr. Venugopal Dhoot (one of the promoters of the Videocon group) for the consolidation of the Corporate Debtor along with other group companies. The Adjudicating Authority, vide its order dated August 8, 2019, allowed State Bank of Indias application by, inter alia,

(i) allowing the consolidation of the CIRP of the Corporate Debtor with that of 12 other Videocon group companies (collectively referred to as the “Corporate Debtors”, “Videocon Group Entities”); and

(ii) appointing Mr. Mahender Kumar Khandelwal as the insolvency resolution professional for the Videocon Group Entities.

Subsequently, the first meeting of the consolidated committee of creditors of the Corporate Debtors (“CoC”) was held on September 16, 2019. At the first meeting of the CoC, the CoC approved the name of Mr. Abhijit Guhathakurta as the resolution professional for the Videocon Group Entities, including the Corporate Debtor in place of Mr. Mahender Komar Khandelwal. Mr. Abhijit Guhaihakurtas appointment as the resolution professional of the Videocon Group Entities (“Resolution Professional”, “RP”) was approved by the Adjudicating Authority vide its order dated September 25,2019. A copy of the said order of the Adjudicating Authority was made available to the Resolution Professional on September 27, 2019 when the same was uploaded on the website of the Adjudicating Authority.

On and from the date of publication of the aforesaid order, the powers of the board of directors of the Corporate Debtor stood vested in the Resolution Professional.

Thereafter, CoC had approved the resolution plan submitted by Twin Star Technologies Limited (the “Resolution Plan”), by passing the requisite resolution with 95.09% majority/voting share in accordance with the provisions of Section 30(4) of the Code. The said Resolution Plan, as approved by the CoC, had been filed with the NCLT in accordance with the Section 30(6) of the Code for its approval on December 15, 2020. Further, NCLT vide order dated June 08, 2021 (“Approval Order”), approved the resolution plan submitted by Twin Star Technologies Limited (“Approved Plan”).

In terms of the Approved Plan, a steering committee had been constituted (“Steering Committee”). The Steering Committee in its meeting held on June 18, 2021 had appointed the Resolution Professional, Mr. Abhijit Guhathakurta, as the interim manager of the Corporate Debtors (“Interim Manager”), for undertaking the management and control the Company, from the date of Approval Order till the completion of the implementation process on the Closing Date (as provided under the Approved Plan).

However, pursuant to the appeals filed by three dissenting financial creditors (among others) before the Honble National Company Law Appellate Tribunal, New Delhi (the “NCLAT”), the Honble NCLAT, vide its order dated July 19,2021 in the said Appeals (the “Stay Order”), inter-alia stayed the operation of the NCLT Approval Order till the next date of hearing and ordered the maintenance of status quo ante as before passing of the NCLT Approval Order. Further, as per the Stay Order, the Resolution Professional was directed to continue to manage the 13 Videocon Group Entities as per the provisions of the Code till the next date of hearing.

Later on, the NCLAT vide its final order dated January 05, 2022 set aside the Approval Order and remitted back the matter to the COC for completion of the process relating to CIRP in accordance with the provisions of the Code (the, “NCLAT Final Order”). Subsequently, pursuant to the NCLAT Final Order, the COC in their meeting held on January 12, 2022, decided to invite afresh expressions of interest for submission of a consolidated resolution plan for Corporate Debtors in accordance with IBC and CIRP Regulations.

However, Twin Star Technologies Limited challenged the NCLAT Final Order in Civil Appeals bearing numbers 509, 512 and 894 of 2022 before the Honble Supreme Court (“SC Appeals”). The SC Appeals were listed on February 14, 2022, on which date, the Honble Supreme Court made oral remark to the Resolution Professional and COC to not proceed further with the CIRP of the Corporate Debtors till any further orders m subsequent hearings. Pursuant to these oral remarks of the Honble Supreme Court, the status quo is being preserved in the current CIRP of Consolidated Corporate Debtors till further orders/directions of the Honble Supreme Court. Therefore, the Resolution Professional continues to manage the Videocon Group Entities (including the Company), as per the provisions of the Code. As a result, the powers of board of directors of the Corporate Debtor are being exercised by the Resolution Professional in terms of provisions of Section 25 of the Code.

As elaborated in the Directors Report, the pre-CIRP director is not co-operating with the RP and there is no CFO available with the Company as on the date of this report.

Further, pursuant to Consolidation of CIRP of Videocon Group Entities, including the Company and due to limited availability of resources and various other operational constraints involved, the entire accounting and secretarial compliances of Videocon Group Entities (including the Corporate Debtor) are being collectively managed by employees, officials and consultants of Videocon Group Entities (hereinafter referred to as “Group Resources”).

Therefore, in compliance with the requirements of the SERI (LODR), this Management Discussion and Analysis report is being presented in reliance with the information furnished by the Group Resources.

I. Industry, Structure and Developments, Opportunities, Threats, Outlook, Risk and concerns:

The Company is primarily engaged in the business of consumer electronics and home appliances with Television, Air-conditioners, washing machines and refrigerators as its primary products. The Company is also engaged in Crude Oil and Natural Gas (directly as well as through its subsidiaries) and Telecommunications (through its subsidiaries).

The Resolution Professional continues to manage the Company on going concern basis with the available limited resources, endeavouring to operate the business of the Company in most beneficial manner for the Companys long term sustainability and growth. For abundant clarification, it may be noted that the subsidiaries (other than those forming part of Consolidated CIRP) have not been under the control of the Resolution Professional.

Since the Company is under CIRP, no forward looking remarks / statements have been presented. The future developments, opportunities, threats, outlook of the Company as well as risk and concerns are subject to the outcome of SC Appeals and/or any other course of action around resolution of Videocon Group Entities.

II. Segment wise or product-wise performance:

The segment wise turnover, at standalone level, is as under:

(INR Million)

Segment	Year ended on March 31, 2024	Year ended on March 31, 2023
Consumers Electronics and Home Appliances	378.68	284.96
Crude Oil and Natural Gas	6,334.65	7,579.57

III. Internal Control Systems and adequacy:

The Resolution Professional continues to manage the Company on going concern basis with the available limited resources, endeavouring to operate the business of the Company in most beneficial manner for the Companys long-term sustainability and growth.

Pursuant to Consolidation of CIRP of Videocon Group Entities, due to limited availability of resources, the accounting and secretarial compliances of Videocon Group Entities (including the Corporate Debtor) are being collectively managed the Group Resources. Further, all payments are being approved only by the Resolution Professional. The Company has established effective controls for monitoring CIRP period transactions undertaken post assumption of office of the Resolution Professional.

IV. Discussion on financial performance with respect to operational performance: Income:

Revenue from Operations

During the year under review, the Cum pi my achieved Revenue from Operations of Rs. 6.512.24 Million as against Rs. 7,864.54 Million for the year ended on March 11,7071

Other Income

Other Income amounted to Rs. 201.09 Million for the year ended March 31, 2024 as against Rs. 422.56 Million for the year ended on March 31, 2023. Other income comprises of interest income, profit on sale of fixed assets, insurance claim received, exchange rate fluctuations and other non-operating income.

Expenditure:

Cost of Goods Consumed

During the year under review, Cost of Material Consumed stood at Rs. 68.17 Million as against Rs. 131.18 Million for the year ended on March 31, 2023.

Employee Benefits Expenses

During the year under review, employee benefit expenses were Rs. 232.62 Million as against Rs.403.50 Million for the year ended on March 31, 2023.

Finance Cost

Since the commencement of CIRP, there is a Moratorium in terms of section 14 of the Code towards repayment of debts subsisting as on CIRP Commencement and interest thereon. However, pending resolution process, the Company has provided interest for full financial year including moratorium period. Payment towards such interest expenses are subject to the -------- the Code and outcome of CIRP.

During the year under review, the Finance Cost (booked on provisional basis) was Rs. 80,060.87 Million as against Rs. 66,656.36 Million for the year ended on March 31,2023.

Other Expenses

During the year under review, the Other Expenses were Rs. 296.79 Million as against Rs.437.89 Million for the year ended on March 31, 2023.

Depredation & Amortization

Depreciation & Amortization amounted to Rs. 4,432.97 Million as against Rs. 4,877.78 Million for the year on March 31, 2023.

Loss before Tax

The Toss before Tax for the current year amounted to Rs. (83,362.29) Million as against a loss of Rs.(70,883.75) Million for the year on March 31,2023.

Net Profit /Loss

Net Loss of the Company for the current year amounted to Rs. (83,487.71) Million as against a loss of Rs.(70,859.18) Million for the year ended on March 31,2023.

Earnings per Share

Earnings per Share for the current year amounted to Rs.(249.84) as against Rs.(211.94) for the year on March 31,2023.

Significant changes in Key Financial Ratios

Post commencement of CIRP, no additional financing, as stated under the related party section) has been availed by the Company. Further, there is a Moratorium in terms of section 14 of the Code towards repayment of debts subsisting as on CIRP Commencement and interest thereon. Also, as clarified before, reliance has been placed on the opening balances of various accounts /ledgers, including loans and advances and debtor balances, without going into the recoverability aspects of such balances.

Details of significant changes (i.e change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanation thereof, including:

There were following changes in the below-mentioned ratios which may or may not be 25% or more as compared to the immediately previous financial year:

S. No Nature of Ratio	Percent change	Reason
1 Debtor Turnover	0.62 %	The Company had a negative Net Worth of INR 2,57,664.80 Mn. at the start of the year and is undergoing CIRT. Further, tiic Company has incurred additional losses during the year. The operations of the Company have also reduced during CIRP (vLz-s-viz pre-CIP-P period) with non-availability of additional credit facilities and other practical and operational constraints. As explained in the financial statements, revaluation / impairment assessment of assets / provision for outstanding receivables has not been conducted/created. Considering these factors, the standard analytical ratios may not present a true picture.
2 Inventory Turnover	0.84%
3 Interest Coverage Ratio	1.22%
4 Current Ratio	0.99%
5 Debt Equity Ratio	0.88%
6 Operating Profit Margin (%)	0.62%
7 Net Profit Margin (%)	1.42%

The change in Return on Net Worth (“RoNW”) as compared to the immediately previous financial year is as hereunder:

The Company had a negative Net Worth of INR 2,57,664.81 million at the start of the year. Further, the Company has incurred additional losses during the year. Considering the same, RoNW figures have not been computed during the year.

V. Material Development in Human Resources/Industrial Front including number of people employed.

The total number of employees in the Company for the financial year ending on March 31, 2024, was 284.