The National Company Law Tribunal (NCLT) has given its nod to JTL Industries Limited's resolution plan for RCI Industries and Technologies Limited, marking a significant development in the latter's Corporate Insolvency Resolution Process (CIRP).

Key Highlights of the Resolution Plan

• Total Investment: JTL Industries will infuse Rs 66.50 crore into RCI Industries.
• Approval Rating: The Committee of Creditors (CoC) approved the plan with a 98.05% voting share.
• Equity Structure: JTL Industries will acquire a 95% stake in RCI Industries, while existing public shareholders will retain 5%.
• Creditor Settlement: The plan allocates Rs 44.15 crore to secured financial creditors against admitted claims of Rs 268.47 crore.

Financial Implications

The resolution plan outlines the following payments to various stakeholders:

Implementation and Management

• A three-member Monitoring Committee will be formed to oversee the plan's implementation.
• The committee will include representatives from JTL Industries, the CoC, and the Resolution Professional.
• JTL Industries will appoint a new Board of Directors within 60 days of the plan's effective date.

Strategic Rationale

JTL Industries, established in 1991, views this acquisition as a strategic move to diversify its business portfolio and mitigate risks. The company currently operates four manufacturing facilities with a 9,36,000 MTPA capacity.

Regulatory Compliance

The resolution plan complies with various sections of the Insolvency and Bankruptcy Code, including Sections 25(2)(h), 29A, 30(2), 30(4), and 31(1). It also adheres to relevant regulations of the Insolvency and Bankruptcy Board of India.

Timeline and Next Steps

• The implementation of the resolution plan must be completed within 60 days from the NCLT approval date.
• JTL Industries is required to obtain all necessary regulatory approvals within the prescribed period.
• The Resolution Professional will be discharged from duties, except for overseeing the plan's implementation.

This NCLT approval marks a crucial step in RCI Industries' path to recovery and sets the stage for its potential revival under JTL Industries' management.

RCI Industries and Technologies Limited , currently undergoing Corporate Insolvency Resolution Process (CIRP), has reported a significant net loss of Rs 922.01 crores for the financial year ended March 31, 2024. This loss, while substantial, marks an improvement from the previous year's loss of Rs 1,719.34 crores.

Financial Performance

The company's financial results, signed by Resolution Professional Brijesh Singh Bhadauriya, reveal a sharp decline in revenue from operations. For FY24, RCI Industries recorded a revenue of Rs 229.50 crores, a substantial drop from Rs 2,301.89 crores in FY23.

Insolvency Proceedings and Resolution Plan

RCI Industries has been under CIRP since November 2022, following an application filed by Standard Chartered Bank (Singapore) Limited. The company's net worth remains fully eroded, standing at negative Rs 14,779.55 crores.

A resolution plan submitted by JTL Industries Limited has been approved by the Committee of Creditors and is currently awaiting approval from the National Company Law Tribunal (NCLT).

Audit Concerns and Investigations

The auditors have issued a qualified opinion on the financial results, citing multiple concerns:

1. Asset verification issues and discrepancies in the Fixed Asset Register.
2. Forensic audit findings revealing fraudulent transactions worth Rs 369.71 crores.
3. Ongoing regulatory investigations by various authorities including the Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED), and Income Tax Department.

Of particular note is an allegation of fraudulent Input Tax Credit (ITC) claims amounting to approximately Rs 214 crores, currently under investigation by the Directorate General of GST Intelligence.

Legal and Regulatory Challenges

The company faces multiple legal challenges, including:

1. An FIR registered by the Economic Offence Wing, New Delhi, related to an equipment finance term loan.
2. Another FIR filed in Madhya Pradesh concerning alleged misappropriation of job work material worth Rs 10.72 crores.
3. Income Tax Department notices indicating substantial outstanding tax demands across several assessment years.

Outlook

Despite the significant challenges, the financial statements have been prepared on a going concern basis, considering the ongoing resolution process and the potential for revival through the CIRP. The approval of the resolution plan by NCLT remains a critical factor for the company's future.

As RCI Industries navigates through this complex insolvency process, stakeholders await the NCLT's decision on the proposed resolution plan, which could determine the company's path forward.