GB Global Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

la. On September 29, 2017 the Hon'ble National Company Law Tribunal ("NCLT") had admitted the petition under Section 7 of the Insolvency Bankruptcy Code, 2016 ("IBC") for initiating the corporate insolvency resolution process ("CIRP") of the Company and Mrs. Charu Desai was appointed as the interim resolution professional ("IRP") of the Company. Pursuant to the said order, in terms of Section 17 of the IBC, the powers of the Board of Directors of the Company stood suspended, and such powers and the management of the Company vested with the IRP. Subsequently, Mrs. Charu Desai was confirmed as the as the Resolution Professional ("RP") of the Company by the Committee of Creditors ("CoC").

lb. Vide order dated November 30, 2018 ("Resolution Plan Approval Order"), the Hon'ble NCLT approved the Resolution Plan submitted for the Company by Formation Textiles LLC ("Resolution Applicant"). Subsequently, as per Board meeting held on January 31, 2019, the Resolution Applicant took over the management / control of the affairs of the Company.

lc. However, after taking over the management/control of the Company, the Resolution Applicant filed an application dated June 13, 2019 before the Hon'ble NCLT, inter aliaJ seeking leave for making certain revisions/modifications in the approved Resolution Plan ("RA Application").

Id. Further, an application was filed by Bank of Baroda on behalf of the CoC, before the Hon'ble NCLT on June 26, 2019, inter alia seeking directions to the Resolution Applicant to comply with the plan or as an interim relief hand over possession of the Corporate Debtor, with the aim of reviving the Company as a going concern and to prevent further deterioration to the business of the Company.

le. Subsequently, the Resolution Applicant filed an amendment application in the RA Application, seeking directions for setting aside the NCLT order approving the resolution plan. The Resolution Applicant also informed the Hon'ble NCLT that it had no objection to handover of the possession of the Corporate Debtor back to the CoC without prejudice to the rights and contentions.

If. On December 5, 2019, the Hon'ble NCLT noted that while a separate hearing was required to decide the merits of the application, as an interim measure, directed that the CIRP of the Corporate Debtor to be restored and thereafter, the possession of the Corporate Debtor be handed over to the Committee of Creditors and the erstwhile RP.

lg. Accordingly, at a meeting of the CoC held on January 8, 2020 the Resolution Applicant handed over the possession of the Company to the CoC, which in turn handed it over to Mrs. Charu Desai, the RP of the Company. As per the relevant provisions of the IBC, the powers of the Board of Directors of the Company therefore stand suspended and such powers and the management of the affairs of the Company vest with the RP.

lh. Further, vide order dated February 5, 2020, the Hon'ble NCLT allowed the RP to invite fresh resolution plans from prospective resolution applicants by providing an additional period of 70 days to undertake the process. In view of the restoration of CIRP of the Company, the financial statements are presented on a "going concern" basis.

1i. On March 23, 2020, a nationwide lockdown was declared due to sudden outbreak of Covid-19 pandemic. Insolvency and Bankruptcy Board of India ("IBBI"), vide its notification dated March 29, 2020, has brought an amendment to the provisions of the Insolvency and Bankruptcy Code, wherein period of lockdown imposed by Central Government in wake of Covid-19 outbreak shall not be counted for the purpose of time line for any activity that could not be completed due to the lockdown, in relation to a CIRP. Further, on March 30, 2020, the National Company Law Appellate Tribunal, New Delhi ("NCLAT") took suo-moto cognizance of hardships faced by resolution professionals to conduct the CIRP of the corporate debtors amid Covid-19 concerns. The Hon'ble NCLAT ordered that the period of lockdown ordered by Central Government and State Governments shall be excluded from the period for completing the CIRP of a corporate debtor prescribed under Section 12 of the Code. Hence the period of 70 days to undertake the sale process stands extended till the lockdown continues.

2. The above financial results have been prepared in accordance with the Indian Accounting Standard ("Ind As") as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and SEBI's Circular no CIR/CFD/FAC/62/2016 dated July 5,2016 as amended time to time and has been approved by the Company Management.

3. The above financial results for the Quarter and Year ended March 31, 2020 which have been approved by the Company Management (refer to note lg and 15) and are audited by the statutory auditors of the Company, in terms of Regulations 33 of the SEBI (listing obligations and disclosures requirements.) Regulation 2015 as amended.

4. The erstwhile Resolution Applicant had filed an application in the Hon'ble NCLT seeking directions for setting aside the NCLT order approving the resolution plan. Since the matter sub-judice, the accounting impact of the November 30, 2018 order approving the Resolution Plan has not been given in the books of accounts other than reduction of the equity Shares of the Company which have been reduced to l/10th and any fractional Equity Share have been rounded to 1 Equity Share on 31st May, 2019. Accordingly, the no. of equity share reduced from 3,31,23,913 to 33,14,295 and equity Share Capital reduced from Rs.33,12,39,130 to Rs.3,31,42,950/-. An amount of Rs.29,80,96,180/- has been transferred to Capital Reserve.

The same was given effect, keeping in view, that by the time the erstwhile Resolution Applicant had filed application for setting aside the Resolution Plan, the process for reduction of the equity share capital of the Company as per terms of the Resolution plan had already been completed.

5. The Company has stopped providing interest on borrowings from lenders/banks from April 1,2018 pending final resolution of the matter in Hon'ble NCLT.

6a. An amount of Rs. 50 crore was received on July 11, 2018 from the erstwhile RA, Formation Textiles LLC in lieu of performance bank guarantee as part of the CIRP in terms of the process memorandum and later on November 6, 2018 the funds were transferred to a fixed deposit with Bank of Baroda. Further on December 24, 2019 the CoC, citing the RA's failure to implement the Resolution Plan, invoked the Performance Guarantee and forfeited the amount and distributed the proceeds to all lenders. However, since the Company has received the fund as a conduit, the Company has presented the amount forfeited by the CoC as reduction from the Rs.50 crores received from the RA.

6b. However, Rs. 5 crores of Earnest Money Deposit given by the Resolution Applicant as per terms of the process memorandum in the form of a Bank Guarantee was also enchased by Bank of Baroda upon its expiry in 2018 and is shown under current liabilities. Further the funds are parked in fixed deposits with Bank of Baroda. Further the infusion of Rs.38 crores by the erstwhile Resolution Applicant toward share application money has also been shown under current liabilities and these funds are kept in escrow account with Bank of Baroda.

7. The erstwhile RA has filed additional application praying the NCLT to refund Rs. 93 crores deposited in the Company towards the resolution plan along with interest. The NCLT is still to hear on this additional application moved by the RA. Till the NCLT gives its verdict, the treatment given in the books of accounts for the performance bank guarantee and EMD is subject to settlement by erstwhile RA and the CoC.

The "Property, Plant & Equipment" includes land shown as Freehold land located at Dodballapur near Bengaluru. The said land was leased under a lease cum sales agreement dated June 23, 2008 with Karnataka Industrial Area Development Board ("KIADB") for 10 years and after Completion of 10 years the lessor was to sell the land to the Company. As per letter dated 14th May 2019, KIADB raised demand against the Company to deposit Rs. 76.63 lacs towards cost difference of land and various other outstanding dues for transferring the said property in the name of the Company. The Company is in possession of a receipt which mentions that the said amount is already paid, however the RP is still ascertaining the details of the said transaction.

Since the appointment of RP post restoration, the RP has written to KIADB regarding the status of pending formalities to be complied or amounts due to be paid to KIADB and sought support in completing the registration in the name of the Company. As on date no response has been received from the KIADB. Hence the Company has not accounted for the various amounts demanded by KIADB as per their letter dated May 14, 2019, due to uncertainty relating to the action that the erstwhile RA may have taken in regard to the demand notice referred to above. As the said amount is not paid from the company's bank accounts and as there is uncertainty involved relating to the said payment, till the time the response is received from KIADB the company has not accounted for the said payment in the books and the effect will be given based on the response received from KIADB. Pending outcome of the said demand, the company has disclosed the same as a contingent liability.

The Company continues to disclose the said property in the financial statement as free hold land. The Company had also entered into a Memorandum of Understanding ("MoU") with Bombay Rayon Fashions Limited ("BRFL") for sale of the above referred property once the title is transferred in the name of the Company and had received the Deposit of Rs. 2.25 crores as sale consideration in 2010.The said amount is reflected as Deposit under other long - term liabilities.

A Factory Building located at Sewri -Mumbai, for an amount Rs.1475.45 lacs was capitalized in the Financial Year 2007-2008, the WDV of the said property as on March 31, 2020 is Rs. 882.52 lacs. Forthe said property, no title deeds or documents are available in the Company records. However, the property remains in the physical possession of the Company.

8. The Company had adopted modified retrospective approach as per para C8 (c) (ii) of 1ND-AS 116, Leases to its leases effective from accounting period beginning from April 01,2019 and recognized Right of Use Assets and Lease Liability as on April 01, 2019.
The impact for the same is as follows:

For Table, kindly refer Corporate Announcements on www.bseindia.com.

During the year a Leased Property accounted as Right to used assets got Vacated on January 31, 2020, the reversal impact has been provided in Profit & loss account as Lease Liability- Written Back and the ROU and lease Liabilities are reversed in the accounts.

9. During the 2nd quarter, the Company changed its Accounting Policy for amortization of leasehold land as the Company had not amortized the same from the date of transition to Ind AS. However, from 2nd quarter the company has amortized the leasehold land with effect from transition to Ind AS. The change in retained earnings and revaluation reserve up to March 31, 2019 is Rs.1051.33 lacs and Rs.976.06 lacs respectively.

For Table, kindly refer Corporate Announcements on www.bseindia.com.

10. Impact of the COV1D-19 Pandemic on the Business:

The lockdown and restrictions due to COVID -19 Pandemic have posed various challenges to the operations and business of the Company. The Company's manufacturing facilities at all locations and offices remained shut down from March 22, 2020, Company has partially resumed its manufacturing operation in some of its units in April (Bangalore) and May (Tarapur) after taking all the necessary precautions on safety of its employees and other parameters as stipulated in the government directives.

Considering that the situation is exceptional, unprecedented and is changing dynamically, the Company is not in position to gauge with certainty, the future impact on its operations. The profitability during the financial year 20-21 will be affected. In view of the prevailing uncertainty, the full extent of the impact of COVID -19 pandemic on the financials of the Company cannot be accurately ascertained at this juncture. The Company is making Continuous efforts to adapt to the changing business environment & respond Suitably to fulfil the needs of its Customers and there by considerably reduce the impact due to COVID-19. Based on the assessment done by the management, the Company, does not see any immediate impairment requirement for any assets due to the pandemic and as the demand for the product have resumed, the Company is positioned to fulfil its obligations and existing Contacts/arrangements.

11. Accumulated GST Credit: - The Company has an accumulated input tax credit of GST of Rs. 911.61 Lacs as per GST Electronic ledger as on March 31, 2020.The Company was able to realise GST refund on exports in a timely manner. However, as per GST Notification No. 20/2018-Central Tax (Rate) dated July 26, 2018, allowing GST refund on account of Inverted Duty structure on Fabric Products from Aug 18 onwards with the condition that accumulated Input Tax Credit up to July 18 "shall lapse". The Company is in the process of applying for refund after ascertaining the ITC amount to be reversed along with interest, the effect of the same will be given in the next quarter when the Company files for the refund. However, the management does not expect a material impact of the same.

12. Contingent liability not provided for: During the year, the Company has received demand notice from income tax authorities for Rs 35.87 crores for AY 2017-18 (FY 2016-17) against which the company has filed appeal. Further, following are state as contingent liabilities with various statutory authorities disclosed in the Annual Report 2019.

For Table, kindly refer Corporate Announcements on www.bseindia.com.

Apart from above the Company has taken benefit of Export Promotion Capital Goods (EPCG) Scheme under the Foreign Trade Policy to the tune of Rs 31.68 crores. This could result into a liability with interest and penalty, if the export obligations under the scheme are not fulfilled by the Company.

Demand from Karnataka Industrial Area Development Board ("KIADB") amounting to Rs. 76.63 lac (refer note 7) Further there is a Contingent liability in the form of Bank Guarantees of Rs 2.98 crores issued to MSEDCL/MCGM/MPCB as per the norms and requirement for continuation of services.

13. The audited financial results for the year ended March 31, 2019 and unaudited financial results for the quarter ended March 31,2019 included in these financial results are based on the previously issued results of the Company prepared in accordance with the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of Companies Act, 2013. Those audited/unaudited financial results prepared under Ind AS were audited/reviewed by the predecessor auditor, whose audit report dated May 23, 2019 expressed an unmodified opinion on those financial results respectively

14. The figures of last quarter for the current year and for the previous year are the balancing figures between the audited figures in respect of the full financial year ended 31st March and the unaudited published year-to-date figures up to the third quarter ended 31st December, which were subjected to limited review.

15. Mrs. Charu Desai in her capacity as RP took control and custody of the management and operations of the Company from January 08, 2020. Since for the period April 1, 2019 to January 07, 2020 the Company was under the previous management, the RP has relied on the certifications, representations and statements made by the previous management for such period.

16. Previous period figures have been regrouped/rearranged, wherever necessary.

17. This is to infrom you that the undersigned Resolution protessional of GB Global Ltdon Tuesday, 7th July,2020 has approved the following.