Morarjee Textiles Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021
Auditor and Management Disclosures and Notes for the quarterly results dated 31 Mar 2021
1. The above audited financial results for the year ended 31st March, 2021 have been reviewed by the Audit Committee and approved by the Board of Directors respectively at their meeting held on 19th May,2021. The Financial result for the Quarter ended March 31, 2021, 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 due to lockdown for almost two months and very low demand and production activity.
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 and future profits for adjusting MAT Credit Entitlements as at 31st March, 2021 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. 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.
4. During the year the Company has submitted debt restructuring plan to the consortium of lenders, in terms of RBI Circular dated June 7, 2019. The plan submitted by the Company envisages several reliefs and concessions from the lenders. The Core Committee formed by the lenders consortium has commenced the debt restructuring process and undertaken several steps in this regard and it is so far progressing satisfactorily.
5. The Company has incurred net loss including cash losses during the year as also in the previous year, owing to high finance cost, weak demand coupled with impact on account of current pandemic conditions. As at the end of the financial year, the net worth stands eroded completely.There have been continuous delays and defaults in repayment of debt obligations. The loan account of the Company is currently NPA with all lenders and some of the lenders have served notice on the Company, requiring repayment of the loan and the company is in discussions with them to resolve the same. Further, the company has, after obtaining the approval of preference shareholders approached NCLT under section 55 of the Companies Act 2013 for reissuance of preference shares of Rs.10 crs which were due for redemption on 15th November 2019, for a further period of 20 years.The approval of NCLT is awaited.
These events/conditions indicate the existence of uncertainty on the Company's ability to continue as a going concern. However having regard to the debt restructuring plan submitted as explained in Note 6 above and various cost control initiatives taken by the company, gradually improving operations of the company, sale of inventory, mobilisation of additional funds and other strategic initiatives, the management has a reasonable expectation that the Company would have ability and adequate resources to continue its operational existence for the foreseeable future. Accordingly, the financial results are prepared on a going concern basis.
6. Other Current Assets includes an amount of Rs. 3,577 lakhs (P.Y Rs. 3,588 lakhs) as on 31st March, 2021 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.
7. MAT Credit Entitlement of Rs 3,041 lakhs (P.Y Rs. 3,041 lakhs) is based on future performance and expectation of full utilization of MAT Credit within time frame available as projected by the Management of the Company.
8. Corresponding figures of the previous periods have been regrouped wherever necessary.