💰 Financial Performance

Revenue Growth by Segment

Total income declined by 23.89% from INR 273.51 Cr in FY22 to INR 208.16 Cr in FY23. Segment-specific growth percentages are not disclosed in the available documents.

Profitability Margins

Operating Profit Margin deteriorated from -5.7% to -35.3% in FY23. Net Profit Margin fell from -32.4% to -89.6% due to lower turnover failing to cover fixed expenses and a significant increase in interest costs.

EBITDA Margin

EBITDA margin was -24.27% in FY23 (INR -50.53 Cr) compared to 2.64% (INR 7.23 Cr) in FY22, representing a sharp decline in core profitability due to operational headwinds and lower capacity utilization.

Capital Expenditure

Property, Plant and Equipment stood at INR 386.79 Cr as of March 31, 2023, down from INR 408.65 Cr in the previous year. Planned Capex is not disclosed due to the ongoing Corporate Insolvency Resolution Process (CIRP).

Credit Rating & Borrowing

The company's debt has been classified as Non-Performing Assets (NPA) by lenders. Interest costs increased by 9.85% to INR 79.60 Cr in FY23 despite the financial distress.

⚙️ Operational Drivers

Capacity Expansion

Current installed capacity is not specified; however, the company has historically invested in its manufacturing plant to align with latest technology. No expansion is planned as the company is under CIRP.

Raw Material Costs

Raw material costs are not explicitly broken down as a percentage of revenue, but the company noted that raw material availability and cost are critical factors impacting operations.

Manufacturing Efficiency

Manufacturing efficiency has been severely impacted by lower turnover and industrial strikes, leading to an inability to cover fixed costs.

📈 Strategic Growth

Expected Growth Rate

0%

Growth Strategy

The company is currently under the Corporate Insolvency Resolution Process (CIRP) as of February 9, 2024. Growth is currently non-existent as the focus is on debt resolution and finding a resolution applicant through the NCLT process. The Resolution Professional is managing affairs to maintain the company as a going concern.

Products & Services

High-end cotton textiles and apparel fabrics.

Brand Portfolio

Morarjee.

Strategic Alliances

The company has an investment in a Joint Venture valued at INR 0.44 Cr as of March 31, 2023.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainability and eco-friendly practices. The textile business is cyclical on the supply side due to high capital intensity, requiring large expenditures at specific times to remain competitive.

Competitive Landscape

The company operates in a highly competitive and capital-intensive textile market, currently losing ground due to financial instability and insolvency.

Competitive Moat

The company's moat was historically based on its long-standing brand and technological investments, but this has been eroded by a negative net worth and accumulated losses of INR 303.77 Cr.

Macro Economic Sensitivity

Highly sensitive to global economic activity, inflation, and cost-of-living crises which reduce discretionary spending on apparel.

Consumer Behavior

Increasing consumer pressure for sustainable and eco-friendly fashion practices is a key trend affecting long-term demand.

Geopolitical Risks

Russia’s invasion of Ukraine and geopolitical tensions are cited as factors weighing heavily on the economic outlook and triggering financial stress.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Insolvency and Bankruptcy Code (IBC) 2016 since the initiation of CIRP. Compliance with Section 123 of the Companies Act regarding dividends was not applicable as no dividends were declared.

Taxation Policy Impact

Deferred Tax Assets (Net) stood at INR 30.41 Cr as of March 31, 2023.

Legal Contingencies

The company is under CIRP following an order by NCLT Mumbai dated February 9, 2024 (CP(IB) No. 1318/MB-VI/2022). Lenders and operational creditors have filed for recall of debt and legal recourse. Accumulated losses of INR 303.77 Cr have resulted in complete erosion of net worth.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the 'Going Concern' status, with auditors issuing a qualified opinion due to material uncertainty regarding the company's ability to meet liabilities falling due within one year.

Third Party Dependencies

High dependency on financial creditors who have classified debt as NPA and served recall notices.

Technology Obsolescence Risk

While the company has historically invested in technology, the current lack of capital expenditure (Capex) poses a risk of falling behind in manufacturing competitiveness.

Credit & Counterparty Risk

Trade receivables fell significantly to INR 5.22 Cr in FY23 from INR 20.94 Cr, though the Debtor Turnover Ratio improved to 11 times due to faster realizations.