Artson Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021

1) The above Financial Results for the year ended 31 March 2021 have been reviewed by the Audit Committee and approved by the Board of Directors at their meetings held on 21 April 2021 and the same have been audited by the Statutory Auditors in compliance with regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Statutory Auditors have issued an unqualified audit report.



2) The Company operates in only one business segment viz. Supply of Equipments, Steel Structures and Site Services for Mechanical Works.



3) The Company has changed the depreciation method from written down value to straight line with effect from 1 April, 2020 to ensure consistency with the policies followed by the Holding Company, practises followed by the entities in the Construction industry and to reflect the expected pattern of consumption of the future economic benefits based on internal technical and commercial assessment. This change has resulted in decrease in depreciation expense amounting to Rs. 28.99 lakhs , Rs. 30.91 lakhs and Rs. 107.86 lakhs for the quarter ended 31 December 2020, quarter ended 31 March 2021 and year ended 31 March 2021 respectively.



4) The figures for the last quarter are the balancing figures between the audited figures in respect of the financial year and the published unaudited year to date figures up to the third quarter of the financial year.



5) Covid-19 which continues to spread across the globe, including India, has contributed to a significant decline in economic activities and volatility in the businesses. Post announcement by WHO as a global pandemic, numerous steps have been taken by the Government and companies to contain the spread of the virus. The extent to which the business/operations of the Company will be impacted will depend on future developments which are highly uncertain. Whilst the Company has a committed order book of Rs.26,099.14 Lakhs as at 31 March 2021, there is considerable uncertainty regarding the extent that Covid-19 will affect the business and operations of the Company. Further, the Company has carried out an assessment of “going concern”, the recoverability and carry value of assets, etc. based on certain assumptions, cumulative knowledge and understanding of the business and current indications of future economic conditions and has made adjustments, wherever necessary. However, the actual impact may be different from that estimated as at the date of approval of the financial statements.

6) The Company during the year ended 31 March 2021 has incurred a net loss of Rs. 567.88 lakhs and as at 31 March 2021 the accumulated losses of the Company (including other comprehensive income) stood at Rs. 4,714.60 lakhs. Consequently, the networth came down to Rs 11.47 lakhs as at 31 March 2021. On account of the significant operating loss during the year and other indicators, the Management including the Board of Directors of the Company, have performed an assessment on their ability to continue as a going concern. The Board of Directors based on their review of the approved business plan and the future cash flow projections prepared for the next twelve months from the date of the financial results has assessed that it would be able to meet its cash flow requirements for the next twelve months from the date of financial results considering the following reasons

a) The Company has incurred cash loss during the year ended 31 March 2021 mainly on account of the certain projects turning onerous due to increase in costs to complete them and on account of the impact on the business operations during the current year attributable to Covid-19.

b) The Company expects a growth in the business, improvements in the operating margins and improvement in the Cash flows in the future by focusing on the following:

i. The Company has a pending order book for around Rs. 26,099.14 lakhs as at 31 March 2021. Additionally, the Company is hopeful of receiving some orders for which it has already submitted their bids.

ii. The Company is in the process of bidding for multiple projects for Tata Projects Limited (‘TPL’), Holding Company and it is hopeful of receiving orders from TPL in the coming quarters based on competitive bidding and Arm’s Length Pricing norms.

iii. The Company plans to successfully pursue for customer claims in the next quarters, which would significantly improve their operating margins as well as their cash flows.

iv. Some of the major projects of the Company are in the final stages of completion and the Company plans to complete the pending milestones for these projects in the next quarter. This would reduce the unbilled revenue amount which in turn would improve the working capital/Cash flow situation of the Company.

v. The Company has registered itself as a Medium Enterprise as per the requirements of the Micro, Small and Medium Enterprises Development Act, 2006. This would significantly improve the working capital situation/Cash flow situation of the Company as the customers would be obligated to make the payment to the Company within the stipulated timelines under the Act.

vi. The Company is also in the process of reviewing its borrowing facilities and currently renegotiating with lenders for lower interest rates. The Company through this exercise is trying to reduce their finance cost thereby improving the overall margins.

c) As at 31st March 2021 there are three Directors nominated by TPL on the Board of Company, which demonstrates continuous operational and business support.



Based on the assessment performed above, Management has prepared the accompanying financial results on a going concern basis.



7) The figures of the previous periods have been regrouped / reclassified wherever necessary.