Onward Technologies Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

Notes:

1. The statement has been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on May 15, 2020.

2. This statement has been prepared in accordance with the Companies (Indian Accounting Standard) Rules, 2015 (Ind AS) prescribed under section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable.

3. The Company has only one operating segment which is Engineering Design and IT services. Accordingly, separate segment information is not required to be disclosed.

4. During the quarter and twelve months ended as on March 31, 2020, the Company issued 19,500 and 237,700 equity shares respectively following the exercise of stock options by certain employees under the ESOP scheme, 2009.

5. Effective April 1, 2019, the Company has adopted Ind AS 116 "Leases" using simplified approach. Consequently the company has recorded lease Liability of Rs. 1,748.01 lakhs calculated at the present value of the remaining lease payments discounted at the incremental borrowing rate and recognised right-of-use asset of Rs. 1,800.30 lakhs calculated at amount equal to lease liability, adjusted by the amount of prepaid lease payments relating to leases recognised in the balance sheet immediately before the date of initial application. Due to transition, the nature of expenses in respect of operating leases has changed from "lease rent" to "depreciation cost" and "finance cost" for the right to use assets and for interest accrued on lease liability respectively, and therefore these expenses for the current period are not comparable to the previous periods disclosed. Impact of adopting IND AS 116 has resulted in increase in finance costs by Rs. 147.63 Lakhs increase in depreciation and amortisation expenses by Rs. 472.07 lakhs and decrease in Other expenses by Rs. 510.70 lakhs for the twelve months ended March 31, 2020.

6. The figures for the quarter ended March 31, 2020 and March 31, 2019 are the derived figures between the audited figures for the year ended March 31, 2020 and March 31, 2019 and published reviewed figures of December 31, 2019 and December 31, 2018 respectively.

7. Revenue from Operations for the quarter and twelve months ended as on March 31, 2020 includes export incentives amounting to Rs. 203.82 lakhs and Rs. 396.24 lakhs respectively, claimed under Service Exports from India Scheme, 2015. Till previous year, the company was recognising such incentive basis submission of application with respective authorities. Effective from quarter ended March 31, 2020, the Company has recognised for such incentive on accrual basis as it is confident that such grant will be received. The aggregate effect of such adjustment recognised in the current quarter pertaining to nine months ended as on December 31, 2019 is Rs. 133.62 lakhs.

8. The Company is in the process of striking off it's wholly owned subsidiary, Onward Properties Private Limited. The company has recognised provision for impairment on the investment in subsidiary amounting to Rs.106.93 lakhs in the Year ended March 31, 2020 in "Other Expenses".

9. Pursuant to the announcement made by the Finance Ministry of the Government of India on September 20, 2019, the Company has elected to exercise the option for a lower corporate tax rate as per section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognised Provision for Income Tax and remeasured the Deferred Tax basis the revised lower tax rate.

10. The Novel Coronavirus (COVID-19), a Global Pandemic, is rapidly spreading throughout the world. Outbreak of COVID -19 has significantly affected the social and economic activities worldwide and, as a result, could affect the operations and results of the Company. In line with the advisories, orders and directions issued by the local and state government authorities to prevent and contain the spread of Coronavirus, the Management has taken necessary measures.

The Management has taken into consideration the impact of the known internal and external events arising from COVID-19 pandemic in the assessment of recoverability of trade receivables, contract assets and certain investments in subsidiaries upto the date of approval of these financial results. In this assessment, the company has performed sensitivity analysis on the key assumptions used.

However the impact assessment of COVID-19 is an ongoing process, given the uncertainties associated with its nature and duration. The impact of global health pandemic might be different from that estimated as at the date of approval of these financial results and the Company will continue to closely monitor any significant impact on the company's financial position.

11. One of the subsidiaries of the Company, namely Onward Technologies Gmbh, has incurred recurring losses and has negative net worth. Basis the management's assessment for impairment under IND AS 36, the Company has recognised an impairment loss of Rs 54 lakhs under Other expenses.

12. The Board of Directors in its meeting held on May 15, 2020, has approved a scheme of merger of Onward E Services Limited (a wholly owned subsidiary) with the Company with appointed date from January 1, 2020 subject to requisite regulatory approvals. Pending approval, no impact has been given in the financial results for the year ended as on March 31, 2020

13. The board of directors in its meeting held on May 15, 2020 has recommended final dividend of Rs. 1.50 per equity share of Rs. 10 each for the year 2019-20 subject to shareholders approval.

14. Previous year/period figures have been regrouped / rearranged wherever considered necessary.

Jigar Mehta
Managing Director