Alok Industries Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Jun 2019
Auditor and Management Disclosures and Notes for the quarterly results dated 30 Jun 2019
1. Pursuant to an application made by State Bank of India, the Hon'ble National Company Law Tribunal, Ahmedabad bench ("Adjudicating Authority"), vide its order dated 18 July 2017, had ordered the commencement of the corporate insolvency resolution ("CIR") process in respect of the company under the provisions of the insolvency and Bankruptcy Code, 2016 (the "Code" ).
During the CIR process, only one resolution plan dated 12 April, 2018 ("Resolution Plan") was received from JM Financial Asset Reconstruction Company Limited, JM Finance ARC - March 18 Trust and Reliance industries Limited jointly ("Resolution Applicants").
Pursuant to its order dated 09 March 2019 ("NCLT Order"), the adjudicating Authority approved the resolution plan ("Approved Resolution Plan") submitted by the Resolution Applicants for the Company under Section 31 of the insolvency and Bankruptcy code, 2016 ("Code"). As per the terms of Section 31 of the code, the Approved Resolution Plan shall be binding on the Company, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan.
Pursuant to the Approved Resolution Plan, a Monitoring Committee has been formed w.e.f. 11th March, 2019 to manage the affairs oi the Company and to maintain the Company as a going concern. Considering this the financial statements are being presented on a 'Going Concern' basis.
2. The implementation of the Approved Resolution Plan is yet to commence. Upon implementation of the Approved Resolution Pia , inter alia: A. Total plan outlay of Rs.5252 crore would be deployed as under: (i) Payment to financial creditors 71th 5,052 crore (less any excess CIRP cost, lf any, in terms of the Resolution Plan). (ii) Payment towards CIRP cost, amount due to operational creditors, workmen and employees INR 700 crore. (Ill) Payment towards capital expenditure CINR 500 crore.
B. Reduction of existing share capital - The Resolution Plan proposes reduction of the Company's share capital without any payout to the shareholders, by reducing the face value of each issued and outstanding equity share of the Company from INR 10 to Re, 1.
C. Issuance of Securities - Reliance Industries Limited (RIL) will Infuse (I) INR 250 crore Into the Company against Issuance of 833333333 shares constituting 21.25% of the issued and paid up equity share capital of the Company; (ii) INR 250 Crore into the Company against issuance of 9% optionally convertible preference shares of face value of Re 1 each. Further, the JMFARC- March - 2018 Trust will convert a portion of the Outstanding ARC Debt into equity shares such that it holds 171,06,66,66? equity shares constituting 43.63% of the Issued and paid up equity share capital and will further invoke pledges on 13,59,11,844 equity shares assigned by Financial Creditors, such that It holds In total 47.09% of the issued and paid up equity shore capital of the Company.
D. Post the additional issue of equity and conversion of Outstanding ARC Debt, Existing Promoter Group shall hold 6.66% of the Company's Issued and paid up equity share capital, which, subject to accessory approvals, shall be cancelled through selective capital reduction without any payout to the Existing Promoter Group. Post and subject to the Promoter Capital Reduction, the Trust and/or RIL will in aggregate hold 75% of the Company's Issued and paid up equity share capital. The public shareholding will be 25%.
3. Certain creditors of the Company have filed petitions with the Hon'ble National Company Law Appellate Tribunal, New Delhi and Hon'ble NCLT, Ahmedabad, inter alia, praying for certain reliefs the same are pending for adjudication.
4. The Company has recorded a total comprehensive income of Rs.(66.93) Crore during the quarter, The Company's accumulated losses amounted to Rs.15,725.45 Crore. Total liabilities of the Company as on 3lst March, 2019 exceeded total assets by Rs.12986.77 Crore.
5. The net deferred tax assets as On 30th June, 2019 are Rs.1423.11 crore (Previous Tear Rs.1423.ll crore). Since reliable projections of future taxable income shall 0c available only when the Approved Resolution Plan is implemented, deferred tax assets for the current period are presently not recognized and the net deferred tax assets as at the end of the previous financial year have been carried forward.
6. The Company's current level of operations, at about 30% of the capacity, may not be an indication of the future performance of the Company. Pending implementation of the Approved Resolution Plan, reliable projections of availability of future cash flows of the Company supporting the carrying value of Property, Plant and Equipment cannot be determined. Accordingly Impairment testing under Ind AS has not been performed while presenting these results.
7. Considering the nature of its business activities and related risks and returns, the Company had, at the time of transition to Ind AS, determined that it operates in a single primary business segment, namely Textiles", which constitutes a reportable segment in the context of Ind AS IU8 on 'Operating Segments'. There was been no development during the quarter necessitating any changes In Operating Segment.
8. Since the Resolution Plan for the company has been approved by the Adjudicating Authority, interest on borrowings as per claims admitted for the quarter ended 30th June, 2019 has not been accrued.
9. (a) Alok Infrastructure Limited ("Aide Infra") a wholly owned subsidiary of the company, was admitted under the corporate insolvency resolution ("CIR") process in terms of the Insolvency and Bankruptcy Coda, 2016 ("Code"), vide an order dated 24th October 2018 of the Hon'ble National Company Law Tribunal, Mumbai ("Adjudicating Authority").
The Resolution Professional of Alok Infra has informed that under the advice of the CoC, an operation under Section 12A of the Code has been filed for withdrawing the Insolvency petition of Alok Infra. Currently, this application Is pending with the Adjudicating Authority.
b. During the quarter ended, Alok Infra has incurred a net loss of Rs.2.19 crore. Tim Company's accumulated losses amounted to Rs.998.09 crore. Total liabilities as on 30th June, 2019 exceeded total assets by Rs.921.96 crore.
C. Further, Alok Infra has not carried out any impairment testing of investment property and therefore the correct carrying value of investment property in the consolidated result is unascertainable.
10. The Group has adopted ind AS 116 Teases' effective 1st April, 2019 and applied the Standard to Its leases. This has resulted in recognizing a Right-of Use asset and a corresponding Lease Liability. The Impact on the profits/losses for the quarter is Insignificant.
11. The above results are certified by the Chief Financial Officer and the Company Secretary and taken on record by the Monitoring Committee at its meeting held on 14th August, 2019.
12. The figures of previous periods / year have been reclassified / regrouped, wherever necessary, to correspond with those of the current periods / year.