Mercator Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2023

NOTES FORMING PART OF STANDALONE FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2023



1.A Corporate Insolvency Resolution Process (CIRP) has been initiated against the Company vide an order no. CP(IB) 4404(MB)/2019 dated February 08, 2021 of the Hon’ble National Company Law Tribunal, Mumbai Bench (‘NCLT’) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’). Pursuant to the order, the powers of the Board of Directors stand suspended and are vested with Mr. Girish Siriram Juneja, who had been appointed as Interim Resolution Professional (IRP) by the NCLT and later confirmed as a Resolution Professional (RP) by the Committee of Creditors (CoC). As per requirements of the ‘Code’ and ‘CIRP Regulations’, the Resolution Professional had invited expression of Interest (EoI) from prospective Resolution Applicants (PRAs) to submit the Resolution Plan for the Company. The first round of Invitation of EoI was published on April 24, 2021 and the timelines to submit EoI were extended as approved by Committee of Creditors (CoC). Last date to submit EOI as per second round of Invitation of EoI (published on May 18, 2021) was on June 2, 2021 and the Resolution Professional had declared the final list of Resolution Applicants on July 7, 2021. The last date for submission of resolution plan was August 31, 2021, which was thereafter extended to September 6, 2021 basis the request received from the PRAs. The application seeking exclusion of the time period of 88 days i.e. from April 4, 2021 to June 30, 2021 from the overall CIRP period (due to the second wave of Pandemic and various restrictions imposed by Government of Maharashtra) was heard and allowed by the NCLT on August 9, 2021. The CIRP period was extended to November 3, 2021. Further, since certain Resolutions Plans were in hand which had to be put before CoC for voting, an application seeking extension of the CIRP time period by 90 days was heard and allowed by NCLT on November 11, 2021 whereby the CIRP period was extended up to February 1, 2022. Vide order dated July 26, 2022, honourable NCLT, Mumbai has excluded period from December 28, 2022 to March 2, 2022 from the CIRP period. Accordingly, CIRP period was extended to April 7, 2022.



The Resolution Plans submitted by the Resolution Applicants (RAs) were placed before the Committee of Creditors for their consideration and the resolution plan, failed to receive the requisite votes in terms of the provisions of the code. Accordingly, an application for liquidation was filed in terms of section 33 of the Code.



NCLT, Mumbai has ordered the company to be liquidated as a going concern and Mr. Girish Siriram Juneja has been appointed as Liquidator of the company vide its order dated February 21, 2023.



Pursuant to the aforesaid order by NCLT, Liquidator is trying to liquidate the company as a going concern. Accordingly, the financial results of the Company have been prepared on a going concern basis.



2.The standalone financial results of Mercator Limited (hereinafter referred as “the Company”) for the quarter and nine months ended December 31, 2023 have been prepared by the Chief Financial Officer (CFO) and the management, reviewed by the Audit Committee and approved at the meeting of the Liquidator & Directors held on February 3, 2024. The Liquidator with the assistance of the management and Chief Financial Officer of the Company has made all practical and reasonable efforts to prepare the results for the quarter and nine months ended December 31, 2023. These results have been prepared with the same 'Basis of Preparation' as adopted by the erstwhile Board of Directors as prescribed under the Companies Act, 2013 and related regulations. For opening balances of the earlier year as well as transactions made prior to initiation of CIRP, Liquidator has relied on the representations and statements made by the Directors and the KMPs of the Company. The Liquidator has relied upon the assistance provided by the members of the Audit Committee in review of the financial results and certifications, representations and statements made by Director of the Company in relation to these financial results. As authorised, Director and Chief Financial Officer of the Company have signed the financial results and the Liquidator has taken on record the said statement of financial results.



3.The financial results of the Company have been prepared in accordance with the recognition and measurement principles laid down in the applicable Indian Accounting Standards ("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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular no. CIR/CFD/FAC/62/2016 dated July 5, 2016.



4.The Company has continued to follow the same accounting policies in preparation of financial results for the quarter and nine months ended December 31, 2023 as followed in the previous financial year ended March 31, 2023.



5.The Auditors have expressed a Disclaimer of Opinion on these Financial Results basis the following:



i.Going Concern

The financial results of the Company have been prepared on a going concern basis by the management. The company has negative retained earnings as at December 31, 2023, wherein assets are insufficient in comparison to liabilities thereby resulting in erosion of its Net-worth. Further, the Company had since disposed-off substantial part of the Property, Plant and Equipment (PPE). During the quarter ended September 30, 2021, the remaining only two non-operating dredgers which had been arrested by operational creditors, were sold under auction through orders of the respective Hon’ble High Courts. The current liabilities substantially exceed the current assets and large sums of money receivable are in dispute, which is not readily realisable. As referred to in point #1, liquidation process has been initiated by Hon’ble NCLT, Mumbai. It may be noted that in consonance with the directions passed in the order, the Liquidator appointed will initiate the liquidation process as envisaged under Chapter-III of the Code by following the liquidation process given in the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.



The Company's ability to continue as a going concern is dependent upon many factors including continued support from the financial creditors, operational creditors. In view of the opinion of the Directors and KMPs, resolution and revival of the Company is possible in the foreseeable future. Further, the Liquidator is required to make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern.



The management / Liquidator is of the view that they are making best efforts to achieve favourable order in ongoing litigations in order to protect the value of its assets and is making efforts to revive operations. As per rules and regulations of the Corporate Insolvency Resolution Process (CIRP) stipulated under the Insolvency and Bankruptcy Code, 2016, RP received Resolution Plans from the eligible Prospective Resolution Applicants (PRA). The Resolution Plans submitted by the Resolution Applicants (RAs) were placed before the Committee of Creditors for their consideration and voting but failed to receive the requisite votes in terms of the provisions of the code. Accordingly, an application for liquidation was filed in terms of section 33 of the Code. NCLT, Mumbai has ordered to liquidate the company as a going concern vide its order dated February 21, 2023.



Pursuant to the aforesaid order by NCLT, Liquidator is trying to liquidate the company as a going concern. Accordingly, the financial results of the Company have been prepared on a going concern basis.



ii.As per the Code, the Liquidator has to receive, collate, verify and admit all the claims submitted by the creditors of the Company. Such claims can be submitted to the Liquidator during the Liquidation. The impact of such claims, if any, that may arise has not been considered in the preparation of the unaudited financial results.



Principal portion of loans from financial creditors in the books of the Corporate Debtor have not been restated with the amounts admitted by Liquidator as on Insolvency Commencement Date (“ICD date”) (Rs. NIL million). Total amount of claims towards principal dues of the financial creditors as on December 31, 2023 stand as under:



(Rs. In Million)

a.Amount of Claims received by Liquidator (inclusive of principal and interest component) - 22,934.14

b.Claims provisionally admitted by the liquidator - 20,461.24



Liquidator has received claims as on 31st December 2023. The last date of the receipt of the claim was 07th April 2023. As on 07th April 2023, the total claim amount is Rs. 22,934.1 million, which includes fresh claims filed during the liquidation process and the claims submitted during the CIRP process. As per clause c of sub-regulation 2 of Regulation 12 of Liquidation of IBBI (Liquidation Process) Regulations, 2016, where a stakeholder does not submit its claims during the liquidation process, the claims submitted by such a stakeholder, and duly collated by the interim resolution professional or resolution professional, as the case may be, during the corporate insolvency resolution process under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, shall be deemed to be submitted during the liquidation process.



Secured Financial Creditors including Bank of Baroda, J.C. Flowers Asset Reconstruction Private Limited, ICICI Bank and UTI Structured Debt Opportunities Fund I realised their security interest according to section 52 of the Insolvency & Bankruptcy Code, 2016. These financial creditors had following security interest:



1.Bank of Baroda- Mortgage of Office Premises situated at 8th Floor, Mittal Tower, B Wing, Nariman Point, Mumbai- 400021 in the name of Mercator Limited.

2.J.C. Flowers Asset Reconstruction Private Limited - First paripassu charge on movable, current and fixed assets, including plant and machinery, Insurance Contracts, raw material, current assets, semi-finished and finished goods, consumable stores and all monies, securities, contractor guarantees, performance bonds, cash flows, book debt and receivables, revenues, bank accounts together with investments, fixed deposits, films and any letter of credit provided by any person in favour of the Borrower, excluding the exploration division of the Hypothecator

3.ICICI Bank - First ranking pari-passu and second ranking pari-pasu basis all rights, titles and interest in the vessels [Darshini Prem, Tridevi Prem, Vivek Prem and Uma Prem] for facility I, Facility II, Facility III and Facility IV) has not relinquished the security interest.

4.UTI Structured Debt Opportunities Fund I - 1st Charge on MT Prem Mala, pledge of shares of Mercator Petroleum Limited and recoverable from Mercator Petroleum Limited and recoverable from Mercator Petroleum Limited.



iii.Interest or any other finance cost charges has not been accrued in the books of accounts from the date of commencement of CIR process, i.e. February 8, 2021 onwards, on account of moratorium under section 14 of Code. In view of this, no finance cost other than bank guarantee commission has been debited in the books of accounts of the Company at standalone level during the quarter and nine months ended December 31, 2023.



iv.The Company had impaired investment amounting to USD 56.55 million in Non-Cumulative Redeemable Preference Shares (NCRPS) of its wholly owned subsidiary Mercator International Pte Ltd, Singapore (MIPL) in earlier year. Basis the information available with the management until March’21, the step-down Subsidiary Company had last carried out valuation of coal business taking cut-off date December 31, 2020 for the purpose local reporting requirement, which has been carried till date. However, due to on-going events such as commencement of liquidation proceedings in Mercator International Pte. Ltd (MIPL), Singapore with effect from April 9, 2021 and non-availability of financial statements / financial results / financial information of step down coal subsidiaries at Indonesia for the quarter and nine months ended December 31, 2023, any impact on the valuation is not known as on the date. The coal business is housed in companies which are a subsidiary of MIPL and given the fact that a liquidation has been ordered in case of MIPL by the High Court of the Republic of Singapore, the coal business will be monetized by the liquidator of MIPL or the receiver appointed by the financial creditor with whom the shares of the subsidiary owning the coal business have been pledged, as the case maybe. The residual value, if any, after settling the debts of the financial and other creditors would be available for redemption of the NCRPS of MIPL held by Mercator Limited. No latest information is available with the management of the Company as on December 31, 2023.



v.Non-Current Tax Assets as on December 31, 2023 amount to Rs.559.8 million(net) includes Rs. 704.8 million which has not been settled due to on-going tax assessment for various Assessment Years i.e. AY 2003-04 and from AY 2007-08 to AY 2018-19 against which net tax demand of Rs. 867.5 million has been received and contested by the Company. The management is taking steps to resolve the cases with the income tax department.



vi.Mercator Oil & Gas Limited (‘MOGL’), a subsidiary of the Company was engaged in EPC project awarded by ONGC for conversion of their Mobile Offshore Drilling Unit (MODU) ‘Sagar Samrat’ into a Mobile Offshore Production Unit (MOPU). On September 25, 2018, MOGL received a notice of termination from ONGC for Sagar Samrat Conversion Project after completing almost 96% of the project work. Basis the information available with the management until September 2021, MOGL had initiated arbitration proceedings against ONGC and appointed its Arbitrator and a Tribunal was formed, for which the proceedings were underway. In addition to above, based on the order of Hon'ble Bombay High Court dated July 29, 2019, ONGC had invoked Bank Guarantee amounting to Rs. 1421.9 million which had been accounted in the books of the accounts of MOGL in the earlier years (quarter ended June 30, 2019). Based on the updates available until September 2021 on the progress of the arbitration proceedings, and discussion held in earlier period with the legal counsel, the management is hopeful of a positive outcome in the claim of Rs. 19,467.3 million filed against ONGC. Accordingly, the Company has made 50% impairment for an amount of Rs. 7.3 million for the quarter ended December 31, 2023 (Rs. 21.58 million for the nine months ended December 310, 2023) towards accrued interest on loan given to MOGL. Out of the total outstanding loan of Rs. 1085.53 million, unimpaired amount as on December 31, 2023 is Rs. 649.67 million after considering a provision for impairment of Rs. 435.86 million.



Further, one of the operational creditors had filed petition u/s 9 of IBC 2016 before the National Company Law Tribunal (NCLT), Mumbai Bench against MOGL and the said application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) was admitted vide the order of NCLT dated June 30, 2021 (Order). In terms of Section 17 of the IBC, the power of the Board of Directors stands suspended and all such powers stand vested in an Interim Resolution Professional (IRP) appointed vide the said Order and subsequently confirmed as a Resolution Professional (RP) by the Committee of Creditors (CoC) in their meeting held on July 27, 2021. Further, in terms of stipulations contained in Section 14 of the Code, a moratorium has been declared vide the Order prohibiting certain stipulated actions.



In terms of an update received from RP of Mercator Oil and Gas Ltd., the arbitration tribunal had provided further revised schedule of hearing from October 18, 2021 to October 23, 2021 and final hearing from December 6, 2021 to December 11, 2021. ONGC with a view of postponing the trial, filed a writ petition in Bombay High Court, challenging Tribunal’s various orders for timely completion of October, 2021 Trial. On October 18, 2021, the Tribunal convened to commence the October Trial. However, ONGC was not present in the trial. On October 19, 2021, the MOGL was served with an un-numbered writ petition to be filed by the ONGC before the Bombay High Court (“Writ Petition”), inter alia seeking a direction to the Tribunal not to proceed with the October Trial till such time as the NCLT decides the Parties’ applications, a stay of this Arbitration until final disposal of the Writ Petition, and interim and ad interim reliefs in this regard. The hearing on this petition was fixed for December 15, 2021. ONGC appeared on the October 22, 2021 and requested for new dates for October Trial. Despite MOGL’s objections, new dates were for hearing were give as under:



(a)10, 20 -22 December, 2021 for Respondent’s opening submissions and for completing cross-examination witnesses of both parties;



(b)17-20 January, 2022 for Claimant’s oral submissions



(c)14-17 February 2022 for Respondent’s oral submissions



(d) February 18, 2022 for Claimant’s oral submissions in rejoinder.



Further, RP had updated that the last date of submission of Expression of Interest (EOI) by Prospective Resolution Applicants (PRAs) was October 13, 2021. The Resolution Plan was placed before CoC. However, the plan did not secure a majority vote of the CoC and accordingly an application for approval of liquidation of the Company has been filed with Honorable NCLT, Mumbai.



Pursuant to the public announcement dated June 30, 2021 in relation to invitation for submission of claims against MOGL, the Company has submitted its claim on MOGL for outstanding debt as on July 15, 2021 for a total claim of Rs. 2,227.2 million comprising of Term Loan for a total amount of Rs. 942.1 million and corporate guarantee issued to Axis Bank Ltd. (for and in behalf of MOGL) for a total amount of Rs. 1,285.1 million. The Company has received an acknowledgement of submission of claim from the RP of MOGL who have informed that the Company being a related party of MOGL shall not have any right of representation, participation and voting in a meeting of the CoC. The RP of MOGL has updated that the claim of Mercator Ltd. as a financial creditor for unsecured loans (without voting rights) for Rs. 2,227.2 million have been admitted provisionally by the Interim Resolution Professional for Rs. 942.1 million. The balance amount of claim for Corporate Guarantee executed by Mercator Limited in favour of Axis Bank Limited for various credit facilities by Axis Bank to Corporate Debtor (Rs. 1285.1 million) is admitted as contingent.



A claim of Rs. 19,470 million (USD 262 Mn) was made by the subsidiary company on ONGC. In the view of the management and based on legal advice made available earlier, an estimated amount of Rs. 12,880 million (USD 173.36 Mn) could probably be awarded as payable to the subsidiary company, basis the last information available with RP/management of the company. However, any impact of the settlement will be known only after completion of the ongoing arbitration proceedings. No latest information is available with the management of the Company as on December 31, 2023.



vii.The Company has receivable towards loan given of Rs. 1008.16 million (including debentures) to Mercator Petroleum Limited (MPL) as on December 31, 2023, against which impairment of Rs. 341.74 million has been created and balance outstanding as on December 31, 2023 is Rs. 666.42 million. During the quarter ended December 31, 2023, the Company has provided additional impairment of Rs. 16.58 million (Rs. 35.33 million for the nine months ended December 31, 2023) towards accrued interest on loan to Mercator Petroleum Limited (MPL), Rs. 4.71 million (Rs. 14.14 million for the nine months ended December 31, 2023) towards interest accrued on 6% optionally convertible debentures issued by MPL, on evaluating the following criteria –



a.In October, 2019, MPL had received notice of termination from the Ministry of Petroleum and Natural Gas (MOPNG) in compliance with Production Sharing Contract (PSC) for its non-operative oil Block (CB-3) and also had demanded costs and other dues to be determined as per terms and conditions of PSC. Basis the information available with the management until March 21, the management of MPL and the Company is confident of defending the amounts claimed by Directorate General of Hydrocarbon (DGH). In event of rejection of subsidiary’s contention, basis the latest available information with the management, the estimated financial impact on the Company would be approx. Rs. 358 million.



b.The application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by an Operational Creditor before the National Company Law Tribunal (NCLT), Mumbai Bench against one of the material subsidiary of the Company, Mercator Petroleum Limited (MPL) was admitted vide the order of NCLT dated August 31, 2020 (Order). In terms of Section 17 of the IBC, the power of the Board of Directors stands suspended and all such powers stand vested in an Interim Resolution Professional (IRP) appointed vide the said Order who has taken charge under the directions of the Committee of Creditors. Further, in terms of stipulations contained in Section 14 of the Code, a moratorium has been declared vide the Order prohibiting certain stipulated actions. In terms of the last update received from IRP, as a part of the Corporate Insolvency Resolution Process (CIRP), IRP had floated an Expression of Interest and had received interest from Public and Private Players in the process. Basis the latest available information with the management, the Request for Resolution Plans (RFRP) has been issued to the shortlisted Prospective Resolution Applicants (PRA) and they are required to submit their Resolution Plans in October 2021 as per the process laid down under the Code. Prospective Resolution Applicants (PRAs) have expressed their interest in the Oil Assets of MPL. RP of the said company has informed that the COC has approved one resolution plan which has been put for the approval with the adjudicating authority. Further, it has come to the knowledge of the Liquidator that the honourable NCLT, Mumbai has approved the resolution plan submitted by Indian Oil Corporation Ltd. vide its order dated November 2, 2023.



viii.Non – receipt of Audited / Reviewed or management certified Financial Statements / financial results / financial information from subsidiaries (Step – down subsidiaries)



Indian Subsidiaries –

In view of initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) vide order of NCLT dated August 31, 2020, the financial statements / financial results / financial information of Mercator Petroleum Limited, one of the material subsidiaries of the Company for the quarter and nine months ended December 31, 2023 have not been made available to the Company by IRP of the said material subsidiary. In view of this, the financial statements / financial results / financial information available as on March 31, 2022, have been considered for the purpose of preparing the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



In view of initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) vide order of NCLT dated June 30, 2021, financial statements / financial results / financial information of Mercator Oil and Gas Limited, one of the material subsidiary of the Company, for the quarter and nine months ended December 31, 2023 have not been made available to the Company by RP of the said material subsidiary. In view of this, the financial statements / financial results / financial information available as on December 31, 2021, which are neither management / IRP certified nor audited, have been considered for the purpose of preparing the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



The financial statements / financial results / financial information of Oorja Resources India Pvt. Ltd, Mercator Offshore Logistics Pvt. Ltd. and Offshore Transport Pvt. Ltd. for the quarter and nine months ended December 31, 2023 have not been made available by the management of the respective companies. In view of the same, the financial statements / financial results / financial information available for the period ended June 30, 2021 have been considered for the purpose of preparing the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



Overseas Subsidiaries –

Latest available Financial Statements / financial results / financial information of 4 nos. of Singapore subsidiaries i.e. Oorja 1 Pte. Ltd., Oorja Batua Pte. Ltd., Oorja Holdings Pte. Ltd. and Panther Resources Pte. Ltd., pertain to the period ended September 30, 2021, which are neither been certified by the management or liquidator nor audited / reviewed and the same has been considered as provided by the liquidators of Mercator International Pte. Ltd., Singapore. However, the said subsidiaries have not provided their financial statements / financial results / financial information for the quarter and nine months ended December 31, 2023. In view of the same, latest financial statements / financial results / financial information available for the period ended September 30, 2021 have been considered for the purpose of preparing the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



MCS Holdings Pte. Ltd. (In Liquidation) is currently undergoing the liquidation process pursuant to an Order of the High Court of the Republic of Singapore dated April 16, 2021 and M/s Lim Soh Yen (NRIC No. S7672591H) and Lynn Ong Bee Ling Care (NRIC No. S7932085D) of Auctus Advisory Pte. Ltd. have been appointed as joint and several liquidators of MCS Holdings Pte. Ltd. Financials Statements / financial results / financial information of MCS Holdings Pte Ltd. (MCS) (in liquidation) have not been provided to the Company by the liquidators of such subsidiaries. In view of this, financial statements / financial results / financial information available as on March 31, 2021 have been considered for the purpose of preparation of the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



Mercator International Pte. Ltd. (In Liquidation), a material subsidiary of the Company at Singapore, is undergoing liquidation process pursuant to an Order of the High Court of the Republic of Singapore dated April 9, 2021 and M/s Lim Soh Yen (NRIC No. S7672591H) and Lynn Ong Bee Ling Care (NRIC No. S7932085D) of Auctus Advisory Pte. Ltd. have been appointed as joint and several liquidators of Mercator International Pte. Ltd. Financials Statements / financial results / financial information of Mercator International Pte Ltd. (MIPL) (in liquidation) have not been provided to the Company by the liquidators of such subsidiaries. In view of this, latest financial statements / financial results / financial information available as on March 31, 2021 have been considered for the purpose of preparation of the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



Financials Statements / financial results / financial information of rest of the Singapore subsidiaries/step down subsidiaries have not been made available to the Company. In view of this, financial statements / financial results / financial information available as on March 31, 2021 have been considered for the purpose of preparation of the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



Financial Statements / financial results / financial information of all Indonesian subsidiaries (step down subsidiaries of MIPL) for the quarter and nine months ended December 31, 2023 have not been provided to the Company and hence the latest unaudited financial statements / financial results / financial information available as on March 31, 2021 have been considered for the purpose of preparing the Consolidated Financial Results of the Company for the quarter and nine months ended December 31, 2023.



ix.The Company has not been able to obtain any confirmations from debtors, loans and advances from banks and others, current accounts from banks, trade and other payables. Accordingly, adjustments if any arising out of reconciliation with these parties is not readily available. The Company has carried out its internal assessment and accordingly provided/ written off/ back certain receivables/ payables/ loans and advances, wherever necessary. Further, the balances related to Input Tax Credit of Goods and Service Tax as per books of accounts as on December 31, 2023 are under reconciliation with the available regulatory records and any impact of the same will be accounted in subsequent period.



x.All of the directors on the Board of Directors of the Company are disqualified as on December 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Companies Act, 2013.



6.In case of a material step-down subsidiary of the Company, PT Karya Putra Borneo (KPB) - Operating Coal mines in Indonesia, a minority shareholder had raised a frivolous claim with respect to the entire /shareholding of the said subsidiary Company. The subsidiary had received favourable orders from the relevant Courts in this matter and the formalities for restoring the shareholding in the public records was in process as per the last update received earlier. This step-down subsidiary is held through MIPL, which has been substantially impaired in the books of accounts. No latest information is available with the management of the Company as on December 31, 2023.



7.During the financial year ended March 31, 2020, the subsidiary companies namely Mercator Oil and Gas Limited (MOGL) and Mercator Petroleum Limited (MPL) had approached the Company for seeking waiver in charging interest on loan and debenture outstanding in respective companies on account of contingencies in case of arbitration claim of ONGC and delayed realisation and completion of sale of oil blocks respectively. Based on approval by the Board of Directors of the Company and subsequent approval of members of the Company accorded in its annual general meeting held on December 29, 2020, under Section 186 and other applicable provisions of the Companies Act, 2013 and all other applicable laws and regulations, the modification/variation in the terms of loans has been as under:



(i)The repayment of loans to MOGL and MPL along with accrued interest thereon, have an extended bullet repayment due date of on or before June 30, 2022. All other terms and conditions of the loans remain unchanged;



(ii)The accrued interest on 6% Optionally Convertible Debentures issued by MPL in various tranches have an extended bullet repayment due date of on or before June 30, 2022. All other terms and conditions of the 6% Optionally Convertible Debentures including due date of redemption remain unchanged;



(iii)The Board and Shareholders have approved that the defaults by MOGL and MPL in repayment of loans along with accrued interest thereon and default by MPL in payment of accrued interest on 6% Optionally Convertible Debentures as on March 31, 2020 and thereafter should not been considered and recognized as an event of default (EOD) and communication with respect to recognition of EOD, if any, made in the past in this regard is waived.



(iv)The Company has not received any request from MOGL and MPL requesting for further extension due for the repayment of loans and interest due thereon and hence these amounts stand due for payment as on September 30, 2022.



The Company continues to maintain its claim of interest and hence has accounted for interest from its subsidiaries amounting to Rs. 31.17 million during the quarter ended December 31, 2023 (Rs. 92.64 million for the nine months ended December 31, 2023) and consequently impaired amounting to Rs. 23.88 million (Rs. 71.06 million for the nine months ended December 31, 2023), based on the assessment of the financial position of the subsidiaries.



8.The Company has an insurance claim amounting to Rs. 542.8 million, being the balance amount payable against a total loss claim (Rs. 2252.9 million) on a vessel pertaining to the year 2012-13, which has been considered fully recoverable by the management and is supported by a legal opinion.



9.The outbreak of Coronavirus (COVID-19) pandemic disrupted the Operations of the Company since end March, 2020. The Government of India ordered a nationwide lockdown to prevent community spread of COVID-19 in India resulting in significant reduction in economic activities. The Company had adopted measures to curb the spread of infection in order to protect the health of its employees and ensure business continuity with maintaining social distancing, sanitization of work spaces etc. Though India recently crossed yet another significant milestone in its battle against the pandemic, as it crossed 2000 million COVID vaccinations (including both the first and second doses), the extent and duration of COVID-19 is currently unknown and depends on future developments that are uncertain. Any resultant outcome and impact on business, due to this is unpredictable. In assessing the recoverability of Company's assets such as Investment, Loans and other receivables, the management has used internal and external source of information up to the date of approval of these financial results. Given the uncertainties, the impact of COVID-19 may be different from that estimated as at the date of approval of these financial results, and the Company will continue to closely monitor the developments.



10.During the year ended March 31, 2019, Credit Analysis & Research Limited (CARE) had downgraded the rating assigned to the Company for short term credit facilities from CARE A4 to CARE D, which was again revised on July 11, 2019 from CARE D to CARE D (ISSUER NOT COOPERATING).



11.Promoters and Promoter Groups have sold 1,20,67,225 no. of Equity Shares of the Company during the year ended March 31, 2022. This has brought down the shareholding of the promoters in the Company to 6.84% as on March 31, 2022. There was further sale of 72,25,050 shares by promoters during the quarter ending September 30, 2022. There is no further sale of shared by promoters during the quarter ending December 31, 2023 and the stake of promoters and promoter group as on December 31, 2023 stands at 4.45%.



12.One of the dredger ‘Vivek Prem’ was sold under court auction order of Hon’ble Gujarat High Court, during the year ended March 31, 2021. As on December 31, 2023, Rs. 35.4 million lying as deposit pending appropriation by the said Court.



As on April 1, 2021, the Company had only two non-operating dredgers i.e. Darshini Prem and Yukti Prem which had been arrested by operational creditors and have been sold under auction through orders of the respective Hon’ble High Courts. The said court had conducted auction sale in the quarter ended September 30, 2021 has resulted in reversal of impairment provision made in the earlier financial years to the extent of Rs. 40.2 million and Rs. 7.9 million aggregating to Rs. 48.1 million.



Considering all the facts stated above, there is no depreciation charge on PPE during the quarter ended December 31, 2023 with respect to PPE.



13.The Company had entered into settlement agreements with approval of NCLT in the pre-CIRP period with few operational creditors amounting to Rs. 39.4 million out of which only Rs. 15.7 million have been honoured and the balance commitment is yet to be discharged by the Company.



14.The office premise of the Company was charged to the lender of Mercator Petroleum Limited. On account of the possession notice received under Section 13 (4) of Securitization and Reconstruction of Financial Assets and read with Rule 8 of Enforcement of Security Interest (Second) Act, 2002, the symbolic possession of the office premises has been obtained by the said lender on September 9, 2020. The enforcement of security has been on account of default in repayment of debt by a material subsidiary of the Company.



As on the reporting date, physical possession has been obtained by the said Bank. However, there is no court order / document executed by the company evidencing transfer of title of the property from the company to the said bank. Hence the same continue to be categorised as property, plant and equipment of the Company and accordingly the depreciation for the period has been charged to the Statement of Profit & Loss. Necessary adjustments, if any, in the books of accounts will be done once the title of the property will be passed to the Bank.



15.One of the lenders of the company Yes Bank Limited (YBL) has informed that pursuant to the execution of Assignment Agreement dated 16-12-2022 between YBL and J. C. Flowers Asset Reconstruction Private Limited (JCF ARC), they have absolutely assigned and transferred unto and in favour of JCF ARC, the loans and all the amounts due and monies stipulated in or payable under the financing documents by the Mercator Ltd. to YBL together with all underlying security interests (including pledges, undertakings and / or guarantee thereto) and their rights, title and interests (of whatsoever nature) in relations to the same.



16.The Company has identified only one major identifiable business segment viz Shipping (including Tankers and Dredgers) at standalone level. Hence, there is only reportable operating segment as per IND AS 108 “Operating Segments” in standalone financials.



17.The Company Secretary of the Company had resigned dated July 23, 2019 and until date of reporting, the said vacancy is yet to be filled.



18.During the previous year ended March 31, 2021, the Company has received letter from the National Stock Exchange of India Limited (“NSE”) citing non – compliance of the requirement of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which requires that the Board of Directors shall comprise of not less than six directors. The Company had then made submission to NSE stating that there were 5 directors on the Board of Company including a woman director. It was also informed that the strength of independent directors is more than the executive directors and the Company was making best efforts to be compliant of the regulation. The Company is making efforts to be compliant, however non – compliance continues as on December 31, 2023.



19.The results for the quarter and nine months ended December 31, 2023 are available on the BSE Ltd website www.bseindia.com, National Stock Exchange of India Limited website www.nseindia.com



20.The Code on Social Security, 2020 ('Code') has been notified in the Official Gazette on September 29, 2020. The Code is not yet effective and related rules are yet to be notified. Impact if any of the change will be assessed and recognized in the period in which said Code becomes effective and the rules framed thereunder are notified.



21.Mr. Harish Kumar Mittal resigned as Director of the company vide his email dated October 21, 2022. Pursuant to provisions of section 28 of Insolvency and Bankruptcy Code, 2016 as amended from time to time, the aforesaid resignation was placed for the approval of the Committee of Creditors (CoC) of the Company at its meeting held on November 15, 2022. CoC requested Mr. Mittal to defer his decision and the same was intimated to Mr. Mittal vide letter dated 29-11-2022. However, Mr. Harish Kumar Mittal has filed e-form DIR-11 with MCA and his resignation has been taken on record by MCA w.e.f. 21-10-2022. After this, number of Directors of the company has fallen less than the minimum number prescribed by The Companies Act, 2013 for public limited companies.



22.Formulae for computation of ratios are as follows –



a) Debt Service Coverage Ratio: Earning before Depreciation, Finance Cost, Impairment, Tax/

Interest Accrued and Due + Outstanding Debt + Finance Cost + Principal Repayments made during the period



b)Interest Service Coverage Ratio: Cash Profits before Finance Cost/Finance Cost



c)Debt Equity Ratio: Total Debt/Total Equity



d)Current Ratio: Current Assets /Current Liabilities



e)Long term debt to working capital: Non-Current Borrowings (Including Current Maturities of Non- Current Borrowings)/Current Assets Less Current Liabilities (Excluding Current Maturities of Non-Current Borrowings)



f)Bad -debts to Account receivable ratio: Bad Debts/Average Trade Receivables



g)Current liability ratio: Total Current Liabilities/Total Liabilities



h)Total debts to total assets: Total Debt/Total Assets



i)Debtors turnover: Value of Sales & Services /Average Trade Receivables



j)Inventory turnover: Cost of Goods Sold (Cost of Material Consumed+ Purchases + Changes in Inventory + Manufacturing Expenses)/ Average Inventories of Finished Goods, Stock-in-Process and Stock-in-Trade



k) Operating margin (%): Earnings before Interest, Tax and Exceptional Items less Other Income/Value of Sales & Services



l)Net profit margin (%): Profit After Tax (after exceptional items)/Value of Sales & Services



23. Figures of previous periods / year have been regrouped / reclassified wherever necessary to conform to current period classification.