Indo Tech Transformers Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The above results of the Company were reviewed by the Audit Committee and approved by the Board of Directors at their respective meetings held on 30 June 2020. The statutory auditors have carried out an audit for the year ended 31 March 2020. An unqualified report has been issued by them thereon.

2. These results have been prepared in accordance with the Ind AS prescribed under section 133 of the Companies Act, 2013 read with the relevant rules thereunder and in terms of Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI Regulations').

3. On 20 December 2019, Prolec GE International, S de R.L de C.V., (the 'Existing holding company') and Shirdi Sai Electricals Limited (the 'Acquirer') have entered into a Share Purchase Agreement (the 'SPA'). Pursuant to the SPA, the Acquirer has agreed to acquire from the Existing holding Company, being the promoter of the Company, 7,366,032 equity shares representing 69.36% of the equity share capital of the Company at a price of Rs. 94.51 per equity share, completion of which shall be subject to receipt of all statutory approvals, as may be applicable, and satisfaction of certain other conditions precedent.

Since the Acquirer has entered into the SPA to acquire the voting rights in excess of 25% of the equity share capital and control over the Company, a mandatory open offer announcement was made by the Acquirer under Regulation 3(1) and Regulation (4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and amendments thereto, for the acquisition of up to 2,724,375 fully paid-up equity shares of the Company, representing 25.65% of the total paid-up equity share capital of the Company. The Acquirer has completed the open offer process as per SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and acquired 454,873 equity shares, which constitutes 4.28% of the total paid up share capital of the Company as on 31 March 2020.

Pursuant to the consummation of the transactions contemplated under the SPA, the Acquirer will obtain control and shall become the promoter of the Company. However, pending such consummation as at date, Prolec GE International, S de R.L de C.V. continues to be the promoter of the Company.

4. The Company had been incurring losses over the last few years and has accumulated losses as at the reporting date. In order to overcome this, the Company has developed a business plan to strengthen its financial position / liquidity and has initiated corrective measures to improve it's operational performance. Based on the approved business plans, availability of banking limits, commitment and intention of the Existing holding Company and the Acquirer to provide timely financial and other assistance as may be considered necessary to enable the Company to continue in operational existence for the foreseeable future, the Company believes that it would be able to meet its financial requirements and no adjustments would be required in respect of the carrying values of assets / liabilities. Accordingly, this statement has been prepared on a going concern basis.

5. Figures of quarter ended 31 March 2020 and 31 March 2019 are the balancing figures between audited figures in respect of full financial year and the published year to date figures upto the end of the third quarter of the relevant financial year. Also, the figures upto the end of the third quarter had only been reviewed and not subjected to audit.

6. During the current year, the Company has received a refund order for AY 2006-07 amounting to Rs. 226 lakhs which includes interest of Rs. 44 lakhs.

7. The depreciation for the quarter ended 31 March 2019 included depreciation amounting to Rs. 64 lakhs on assets which were previously classified as held for sale, reclassified back to property, plant and equipment on account of certain criteria for recognition as held for sale not being met.

8. The Company has only one business segment, which is manufacture and sale of transformers. Hence, there are no other reportable segments.

9. Effective 1 April 2019, the Company adopted Ind AS 116 - Leases, applied to its lease contracts existing on 1 April 2019, using the modified retrospective method. The adoption of the standard did not have any material impact on the financial results of the Company for the year ended 31 March 2020.

10. In March 2020, the World Health Organisation declared COVID-19 to be a pandemic. In view of the economic impact as a result of the pandemic, the Company has considered internal and external information and has performed an analysis based on current estimates while assessing the recoverability of assets including, trade receivables, inventories and other current / non-current assets (net of provisions established) for any possible impact on the financial results. The Company has also assessed the impact of this whole situation on its capital and financial resources, profitability, liquidity position, internal financial controls etc., and is of the view that based on its current assessment, this situation does not materially impact these financial results. The Company will continue to closely monitor any material changes to future economic conditions.