Rajeswari Infrastructure Ltd is undergoing Corporate Insolvency Resolution. Gross turnover fell 46.7% and net loss widened in FY23. Management powers suspended, Resolution Professional appointed.

Rajeswari Infrastructure Ltd Enters Insolvency Amidst Widening Losses

Gross turnover declined 46.7% to ₹1.10 crore in FY23; Net loss widened to ₹0.86 crore.

Reader Takeaway: Insolvency process underway with shrinking revenue and increasing losses; governance concerns persist.

What just happened

Rajeswari Infrastructure Ltd has entered a Corporate Insolvency Resolution Process (CIRP) following an order from the NCLT, Chennai Bench, on May 10, 2023. Consequently, the powers of its Board of Directors have been suspended, and Mr. Sanjay Mehra has been appointed as the Resolution Professional (RP).

Why this matters

The company's financial performance has significantly deteriorated. Gross turnover dropped by 46.7% to ₹1.10 crore in FY 2022-23 from ₹2.06 crore in the previous year. The net loss widened considerably to ₹0.86 crore, up from ₹0.09 crore in FY 2021-22. Basic Earnings Per Share (EPS) also fell to ₹(1.56) from ₹(0.16).

The backstory

The company has faced financial distress, including significant loan defaults to Religare Finvest, Corporation Bank, and Intec Ltd., which directly led to the initiation of CIRP. Furthermore, its printing plant and machinery were lost in 2015 floods, with insurance claims still pending arbitration, creating uncertainty about asset valuation.

What changes now

With the Board's powers suspended, the Resolution Professional is now responsible for managing the company's affairs and overseeing the insolvency resolution process. This means operational and strategic decisions will be made under the guidance of the NCLT and the RP.

Risks to watch

Key risks include the ongoing insolvency proceedings, the widening net loss, and significant loan defaults. Additionally, governance concerns have been flagged by the Resolution Professional and secretarial auditor due to a lack of access to critical company records like minute books and attendance sheets. This lack of transparency hinders audit and compliance oversight.

Peer comparison

As Rajeswari Infrastructure Ltd is in CIRP, direct financial performance comparisons with active peers are difficult and may not be relevant. Its current situation is defined by its insolvency status rather than market competitiveness.

Context metrics (time-bound)

In FY 2022-23, Rajeswari Infrastructure Ltd reported gross turnover of ₹1.10 crore and a net loss of ₹0.86 crore. This contrasts with FY 2021-22 figures of ₹2.06 crore gross turnover and a net loss of ₹0.09 crore.

What to track next

Investors should closely monitor updates from the Resolution Professional regarding the progress of the CIRP. Any developments concerning debt resolution, potential revival plans, or asset claims will be crucial.