Morarjee Textiles Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The Statutory Auditors have audited the above results pursuant to Regulation 33 of the SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 and the same are reviewed by the Audit Committee and taken on record by the Board of Directors at their meeting held on 26th June, 2020. The Financial result for the Quarter ended March 31, 2020, being the balancing figure between audited figures in respect of full financial year and the published year to date figures up to the third quarter of the current financial year which were subject to limited review by auditor.

2. The outbreak of COVID-19 pandemic is causing significant disturbance and slowdown of economic activities globally. The nationwide lockdown ordered by the Government of India has resulted in significant reduction in economic activities throughout the country and also impacted the business operations of the Company in terms of production and sales.
In preparing the accompanying financial results, the Company’s management has been required to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, equity, income and expenses. These estimates and associated assumptions, especially for assessing any impairment of Inventory are based on historical experience and various other factors including the possible effects that may result from the pandemic; and are believed to be reasonable under the current circumstances. Considering the assessment, the Company expects to recover the carrying amount of all these assets.
Given the dynamic nature of the pandemic situation, the valuation of Inventory as at March 31, 2020 is subject to evolving uncertainty and may be affected in future by the severity and duration of the outbreak. In the event the impacts are more severe or prolonged than anticipated, this may have a corresponding impact on the carrying value of the Inventory, the financial position and financial performance of the Company. The management would be closely monitoring the situation as it evolves.

3. The Company has incurred net cash losses for the year owing to high finance cost and debt obligations, resulting from weak demand and growth. During the year, there are delays in repayment of loans and interest to banks and financial institution. Further, the Company has not able to redeem its preference shares of Rs. 10 crores which were due in November 2019. These events/conditions indicate the existence of uncertainty on the Company's ability to continue as going concern. The management is addressing these concerns and is confident that they will be able to arrange sufficient liquidity / find solution to the high debt obligations, increase collections from sale of inventory, mobilisation of additional funds and other strategic initiatives. The Company has also approached NCLT under Section 55 of the Companies Act, 2013, for re-issuance of the said preference shares for a further period of 20 years and approval from such preference shareholders have already been taken. Accordingly, the financial results are prepared on a going concern basis

4. Other Current Assets includes an amount of Rs. 4,011 lakhs (P.Y Rs. 3,161 lakhs) as on March 31, 2020 towards GST input tax credit on account of higher GST on input (specifically on input services) as compared to output. Though Input GST credits are allowed to be carried indefinitely, the utilisation thereof is generally dependent on various factors including volume and value of output in future, rates of tax on output and changes in government policies.
In the opinion of the management, in view of the continuing business of the Company, no provision is considered necessary in this regard.

5. Effective April 1, 2019, the Company has adopted Ind AS 116 "Leases", applied to all lease contracts existing on April 1, 2019 using the modified retrospective method with practical expedient. There is no impact on retained earnings, on the date of initial application. Accordingly, comparatives figures have not been restated. On transition, the adoption of the new standard resulted in recognition of Right-of-Use asset (ROU) with corresponding lease liability of Rs 115.01 lakhs. The effect of this adoption is not material on the losses for the period and earnings per share.

6. Based on the “management approach” as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators of business the segment/s in which the Company operates. The Company is primarily engaged in the business of Textile Products which the Management and CODM recognise as the sole business segment. Hence, disclosure of segment-wise information is not required and accordingly not provided.

7. On 30th September, 2019, the Company has sold its entire holding (49%) in one of its joint venture for consideration of Rs.405.74 lakhs. Consequently the Company has recognised loss of Rs.24.12 lakhs on account of sale of investment and the same has been considered as an exceptional item.

8. The Company having opted to continue with old tax regime in view of unabsorbed losses and depreciation and MAT assets benefits and would evaluate in future. Hence, deferred tax assets (including MAT assets) are continuing in financial results considering old tax regime and management judgment on recoverability based on future projections

9. Corresponding figures of the previous periods have been regrouped wherever necessary.

R. K. Rewari
Managing Director