Mukand Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021
Auditor and Management Disclosures and Notes for the annual results dated 31 Mar 2021
1. The above results have been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 25th May 2021.
2. Post relaxation of lock down by the Government, the plants situated at Dighe, Thane in the State of Maharashtra and Ginigera, Koppal in the State of Karnataka became partially operational as per guidelines of the Government with effect from first week of May 2020. Company’s steel production achieved near full capacity during the year under report. However, from 2nd week of April 2021 on account of diversion of oxygen which was used by the Steel Industry for medical purposes to save human lives, the production of stainless steel at Company’s steel plant at Dighe, Thane has been affected. The stress on liquidity position was partially mitigated by the relief given by the Government, RBI, Electricity Distribution Companies, etc. The second COVID-19 wave poses a downside risk to economic activity in the first quarter of the year in progress. Its impact is expected to be muted compared with that of the first wave a year ago. Management expects that considering the nature of its business operations, existing customer and supplier relationships, impact on its business operations, if any, arising from COVID -19 pandemic may not be significant in the long run and would be able to recover carrying amount of all its assets as appearing in the financial statements and meet its entire financial obligations in the near future. The impact of COVID 19 pandemic may be different from that estimated as at the date of approval of these financial results. The Management will continue to monitor any material changes to future economic conditions.
Monetization of assets:
During the year under report Company decided:
i) To dispose off 51% of equity stake held by the Company in Mukand Sumi Special Steel Ltd, a Joint Venture of the Company to Jamnalal Sons Private Ltd., an entity belonging to the promoter group of the Company. First tranche constituting 30% stake was completed on 31st December 2020 and the second tranche after close of the year, on 30th April 2021 for a total consideration of Rs. 1,213.15 crore. As this investment was measured at fair value in earlier years, this disposal does not have any material impact on the statement of profit and loss for the year under report.
ii) To dispose off 100% of equity stake held by the Company in Vidyavihar Containers Limited, a wholly owned subsidiary at a consideration of Rs. 1.20 crore and the sale was completed on 19th March 2021.
iii) To close the operations and subsequent liquidation of its wholly owned subsidiary Company, Mukand International FZE, Dubai. After close of the year, the Subsidiary has paid back for 4 shares of 1 Million Dhiram each. Accordingly, Company has on 30th April 2021 received Rs.8.07 crore on this account.
iv) To transfer Leasehold Land admeasuring approximately 54.34 acres together with structures standing thereon situated at Trans- Thane Creek Industrial Area, Dighe, Thane for a lumpsum consideration of Rs.679.25 crore plus applicable taxes and the resultant surplus has been included in other income. The said transaction was completed on 26th March 2021.
The results for the year under report includes effect of items at i) to iv) above for transactions completed by 31st March 2021. Amounts realized from above disposals, etc., have been mainly utilized to repay debt / other interest bearing liabilities of Rs. 1,473 crore and this will entail substantial reduction in the yearly interest costs.
4. Petitions filed with NCLT for Scheme of amalgamation between Adore Traders and Realtors Private Limited, a wholly owned subsidiary of Mukand Global Finance Limited with the parent company MGFL, followed by the amalgamation of MGFL and Mukand Engineers Limited with the Company are yet to be approved by NCLT. The Scheme shall be effective from the appointed date 1st April,2019 on receipt of NCLT order and filing the same with Registrar of Companies and therefore the above results do not include effect of amalgamation of these Companies with the Company.
5. Company has opted for Taxation of its income under Lower Tax Regime from financial year 2019-20 onwards and Vivad-se-Vishwas (VsV) Scheme for some of the completed assessments. Necessary effect thereof has been given in the above results under the head “Tax Expense”.
6. Management’s response to the observations of the auditors on the financial statements for the year ended 31.03.2021:
a. The investments in and debts / advances due from Bombay Forgings Limited (BFL) was at Rs. 31.57 Crore (net of amounts written off) as at 31st March 2021 as against Rs. 38.18 Crore (net of provision for expected credit loss) as at 31st March 2020.The management, considering the value of unencumbered fixed assets of BFL, considers the balance dues to be ‘Good’ and adequately covered and barring unforeseen circumstances expects full readability of the same in future.
7. The figures of last quarter are the balancing figures between audited figures in respect of full financial year and the published year to date figures upto the third quarter of the current financial year, which were subjected to Limited Review.
8. Figures in respect of the previous period have been regrouped / recast wherever necessary in case of above results.