Dynamatic Technologies Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The above financial results for the quarter and year ended 31 March 2020 were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 3 July 2020.

2. The above results for the financial year ended 31 March 2020 have been audited and the results for the quarter ended 31 March 2020 have been reviewed by Deloitte Haskins & Sells LLP, the statutory auditors of the Company.

3. Based on the 'Management approach' as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Company performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along with these business segments viz. Hydraulics, Aerospace, Automotive and Metallurgy (formerly known as Automotive and Aluminium Castings) and Others. The accounting principles used in the preparation of these financial results are consistently applied to record revenue and expenditure in individual segments. Refer 'Annexure I' for segment results.

4. Discontinued operations and assets held for sale

During the year ended 31 March 2018, the Board of Directors of the Company vide its meeting dated 28 February 2018, had approved the divestment of 'Automotive and Aluminium Castings' (‘discontinued business’). The discontinued businesses included the Aluminium business, the Iron business and the Windfirm business. Subsequently, the Company had obtained the Shareholders’ approval (a substantive approval) vide postal ballot dated 15 May 2018 and accordingly 'Automotive and Aluminium Castings' was classified as discontinued operation from the quarter ended 30 June 2018.

During the year ended 31 March 2019, the Company had entered into a business transfer agreement to sell certain assets of the Aluminium business. The transaction was consummated on 17 January 2019.

Based on the current management's strategy and in accordance with Ind AS 105- Non-current Assets Held for Sale and Discontinued Operations, the Company has classified the windfarm land from assets held for sale to Property, Plant and Equipment as at 31 March 2020. Prior to this, the said asset was presented as Assets held for sale.



The results of discontinued business included in the standalone financial results are as follows:

(INR in lakhs, except as otherwise stated)



Particulars Quarter ended Year ended

31 March 2020 31 December 2019 31 March 2019 31 March 2020 31 March 2019

Revenue 531 458 1623 2,192 7,853

Expenses 1,481 845 1873 3,792 8,313

Loss before tax (950) (387) (250) (1,600)# (460)*



* Includes loss of INR 188 lakhs on disposal of certain assets relating to Aluminium business.

# Includes loss of INR 974 lakhs on reduction of fair value of Property, plant and equipment.



5. Effective 1 April 2019, the Company adopted Ind AS 116 'Leases' applied to its lease contracts existing on 1 April 2019 under the modified retrospective method. Accordingly, the comparative numbers have not been retrospectively adjusted. The implementation of Ind AS 116 resulted in recognition of Right-of-Use asset of INR 6,078 lakhs and INR 5,044 lakhs and Lease liability of INR 5,772 lakhs and INR 5,034 lakhs as on 01 April 2019 and 31 March 2020 respectively. For the quarter and year ended 31 March 2020, the implementation of Ind AS 116 resulted in lower Profit before tax by INR 135 lakhs and by INR 326 lakhs respectively on account of higher interest cost and depreciation offset by reversal in rent expenses. In the statement of profit and loss for the current period, the nature of expenses in respect of operating leases has changed from lease rent in previous periods to depreciation cost for the 'Right-of-Use' asset and finance cost for interest accrued on 'Lease Liability'.



6. The rapid outbreak of the COVID-19 pandemic presents an alarming health crisis that the world is grappling with and its impacts are unfolding in real time. The COVID-19 outbreak has had a significant effect on the economies of affected countries and international financial markets. Accordingly, the company felt the need to evaluate the impacts of the outbreak on their accounting and financial reporting. Various accounting estimates, which depend on future forecasts, could be impacted by the outbreak.



We have worked on the principle that a conservative approach is both prudent and desirable, given the uncertainty around the length and severity of the pandemic-induced global economic slump. In this context, the company by using internal and external sources, performed a sensitivity analysis in order to arrive at the assumptions on the expected future performance in respect to carrying amounts of property, plant and equipment, investments, inventories, receivables and other assets and based on current estimates, has recognized an impairment loss of INR 7,920 lakhs in respect to investment in foreign subsidiaries during the quarter ending 31 March 2020 (Refer Note 7 below) and further expects the carrying amount of all assets to be recovered. The same has been included in the above standalone financial results under 'Exceptional items' and does not have any impact on consolidated results. It may be noted that as on the date of approval of these standalone financial results, the ultimate impact of the global health pandemic may vary from the estimates as aforesaid.



7. On 11 February 2020, the board of JKM Ferrotech Limited ('JFTL'), a subsidiary of the Company, have approved a Scheme of capital reduction, subject to regulatory approvals. The said scheme has been filed with the National Company Law Tribunal ('NCLT') in March 2020.



The Company undertook an impairment assessment in respect of its direct and indirect investments in JFTL and has recognised an impairment loss of INR 12,621 lakhs and written off trade advances given to JFTL of INR 6,567 lakhs in the quarter ended 31 December 2019.



The Company also undertook impairment assessment of its other investments in subsidiaries as at 31 March 2020 and has recognised an impairment loss of INR 1,900 lakhs and INR 6,020 lakhs in respect of its investment in JKM Global Pte Limited, Singapore (‘JGPL’) and JKM Erla Automotive Limited, India (‘JEAL’) respectively, in the quarter ended 31 March 2020.



The same has been included in the above standalone financial results under 'Exceptional items', and does not have any impact on consolidated results.



The consequential reversal of deferred tax liability of INR 1,845 Lakhs for the quarter and year ended 31 March 2020 is recognised as credit under deferred tax expense (on the impairment loss in respect of investment in JGPL and JEAL).



8. The Company has elected to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation laws (Amendment) Ordinance, 2019. Accordingly, the Company has measured its tax expenses basis the rate prescribed in the said section.

9. The results for the quarter ended 31 March 2020 and 31 March 2019, are the balancing figure between audited figures in respect of the full financial year ended 31 March 2020 and 31 March 2019 respectively and the published year to date figures upto the third quarter of the respective financial year then ended.

10. The standalone financial results of the Company for year ended 31 March 2019, were audited by the B S R & Co LLP Chartered Accountants, the predecessor auditor who have expressed an unmodified opinion.

11. The previous period figures have been regrouped wherever necessary to conform to current period's presentation.




1. The above financial results for the quarter and year ended 31 March 2020 were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 3 July 2020.

2. The above results for the financial year ended 31 March 2020 have been audited and the results for the quarter ended 31 March 2020 have been reviewed by Deloitte Haskins & Sells LLP, the statutory auditors of the Company.

3. Based on the 'Management approach' as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Company performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along with these business segments viz. Hydraulics, Aerospace, Automotive and Metallurgy (formerly known as Automotive and Aluminium Castings) and Others. The accounting principles used in the preparation of these financial results are consistently applied to record revenue and expenditure in individual segments. Refer 'Annexure I' for segment results.

4. Discontinued operations and assets held for sale

During the year ended 31 March 2018, the Board of Directors of the Company vide its meeting dated 28 February 2018, had approved the divestment of 'Automotive and Aluminium Castings' (‘discontinued business’). The discontinued businesses included the Aluminium business, the Iron business and the Windfirm business. Subsequently, the Company had obtained the Shareholders’ approval (a substantive approval) vide postal ballot dated 15 May 2018 and accordingly 'Automotive and Aluminium Castings' was classified as discontinued operation from the quarter ended 30 June 2018.

During the year ended 31 March 2019, the Company had entered into a business transfer agreement to sell certain assets of the Aluminium business. The transaction was consummated on 17 January 2019.

Based on the current management's strategy and in accordance with Ind AS 105- Non-current Assets Held for Sale and Discontinued Operations, the Company has classified the windfarm land from assets held for sale to Property, Plant and Equipment as at 31 March 2020. Prior to this, the said asset was presented as Assets held for sale.



The results of discontinued business included in the standalone financial results are as follows:

(INR in lakhs, except as otherwise stated)



Particulars Quarter ended Year ended

31 March 2020 31 December 2019 31 March 2019 31 March 2020 31 March 2019

Revenue 531 458 1623 2,192 7,853

Expenses 1,481 845 1873 3,792 8,313

Loss before tax (950) (387) (250) (1,600)# (460)*



* Includes loss of INR 188 lakhs on disposal of certain assets relating to Aluminium business.

# Includes loss of INR 974 lakhs on reduction of fair value of Property, plant and equipment.



5. Effective 1 April 2019, the Company adopted Ind AS 116 'Leases' applied to its lease contracts existing on 1 April 2019 under the modified retrospective method. Accordingly, the comparative numbers have not been retrospectively adjusted. The implementation of Ind AS 116 resulted in recognition of Right-of-Use asset of INR 6,078 lakhs and INR 5,044 lakhs and Lease liability of INR 5,772 lakhs and INR 5,034 lakhs as on 01 April 2019 and 31 March 2020 respectively. For the quarter and year ended 31 March 2020, the implementation of Ind AS 116 resulted in lower Profit before tax by INR 135 lakhs and by INR 326 lakhs respectively on account of higher interest cost and depreciation offset by reversal in rent expenses. In the statement of profit and loss for the current period, the nature of expenses in respect of operating leases has changed from lease rent in previous periods to depreciation cost for the 'Right-of-Use' asset and finance cost for interest accrued on 'Lease Liability'.

6. The rapid outbreak of the COVID-19 pandemic presents an alarming health crisis that the world is grappling with and its impacts are unfolding in real time. The COVID-19 outbreak is already had a significant effect on the economies of affected countries and international financial markets. Accordingly, the company felt the need to evaluate the impacts of the outbreak on their accounting and financial reporting. Various accounting estimates, which depend on future forecasts, could be impacted by the outbreak.

We have worked on the principle that a conservative approach is both prudent and desirable, given the uncertainty around the length and severity of the pandemic-induced global economic slump. In this context, the company by using internal and external sources, performed a sensitivity analysis in order to arrive at the assumptions on the expected future performance in respect to carrying amounts of property, plant and equipment, investments, inventories, receivables and other assets and based on current estimates, has recognized an impairment loss of INR 7,920 lakhs in respect to investment in foreign subsidiaries during the quarter ending 31 March 2020 (Refer Note 7 below) and further expects the carrying amount of all assets to be recovered. It may be noted that as on the date of approval of these standalone financial results, the ultimate impact of the global health pandemic may vary from the estimate as aforesaid.



7. On 11 February 2020, the board of JKM Ferrotech Limited ('JFTL'), a subsidiary of the Company, have approved a Scheme of capital reduction, subject to regulatory approvals. The said scheme has been filed with the National Company Law Tribunal ('NCLT') in March 2020.



The Company undertook an impairment assessment in respect of its direct and indirect investments in JFTL and has recognised an impairment loss of INR 12,621 lakhs and written off trade advances given to JFTL of INR 6,567 lakhs in the quarter ended 31 December 2019.



The Company also undertook impairment assessment of its other investments in subsidiaries as at 31 March 2020 and has recognised an impairment loss of INR 1,900 lakhs and INR 6,020 lakhs in respect of its investment in JKM Global Pte Limited, Singapore and JKM Erla Automotive Limited, India respectively, in the quarter ended 31 March 2020.

The same has been included in the above standalone financial results under 'Exceptional items', which will not have any impact on consolidated results.

The consequential reversal of deferred tax liability of INR 1,845 Lakhs for the quarter and year ended 31 March 2020 is recognised as credit under deferred tax expense.





8. The Company has elected to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation laws (Amendment) Ordinance, 2019. Accordingly, the Company has measured its tax expenses basis the rate prescribed in the said section.

9. The results for the quarter ended 31 March 2020 and 31 March 2019, are the balancing figure between audited figures in respect of the full financial year ended 31 March 2020 and 31 March 2019 respectively and the published year to date figures upto the third quarter of the respective financial year then ended.

10. The standalone financial results of the Company for year ended 31 March 2019, were audited by the B S R & Co LLP Chartered Accountants, the predecessor auditor who have expressed an unmodified opinion.

11. The previous period figures have been regrouped wherever necessary to conform to current period's presentation.