Nitco Ltd. — Audit Report / Information 2024

Jun 26, 2024

NITCO/SE/2024-25/19 June 25, 2024

To,

Corporate Service Department	The Listing Department
BSE Limited	National Stock Exchange of India Limited
Jeejeebhoy Towers	Exchange Plaza, Bandra Kurla Complex, Bandra
Dalal Street,	(E),
Mumbai – 400 001	Mumbai – 400 051
Script code: 532722	Script code: NITCO

Dear Sir/Madam,

Subject: Reply to NSE Clarification for observation found in Financial Results submitted with NSE

• Query The Company has not submitted the Statement of Modified Opinion or in case of unmodified opinion(s), a declaration to that effect to the Stock Exchange - CFO sign missing.
• Reply The Company has submitted the Audited Financial Results (Standalone and Consolidated) and Audit Report for the quarter and Financial Year ended March 31, 2024 duly considered and approved by the Board in their Board Meeting held on May 29, 2024 along with the Statement on Impact of Audit Qualifications. The Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2024 (Standalone and Consolidated) which was submitted to the Stock Exchanges was signed by the Managing Director, Chairman of the Audit Committee and the Statutory Auditors. The signature of Chief Financial Officer was inadvertently missed. Please find attached the Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2024 (Standalone and Consolidated) duly signed.

Kindly note that there is no change in the financial figures disseminated earlier. Request you to take the above information on your records.

Thanking You,

Yours Sincerely, For NITCO Limited

_____________ VIVEK PRANNATH TALWAR Digitally signed by VIVEK PRANNATH TALWAR Date: 2024.06.25 19:38:39 +05'30'

Vivek Talwar Chairman & Managing Director DIN: 00043180

Registered Office: NITCO Limited, 3/A, Recondo Compound, Sudam Kalu Ahire Marg, Glaxo, Worli Colony, Mumbai, Maharashtra, India, 400 030. Tel.: 91-22-25772800|25772790. CIN: L26920MH1966PLC016547. Email: investorgrievances@nitco.in Website: www. nitco.in

. Sl. No.	Particulars	Audited Figures (as reported before adjusting for qualifications) (Rs. in Lakhs)	Adjusted Figures (audited figures after adjusting for qualifications) (Rs. in Lakhs)
	Turnover / Total income	32,782.58	32,782.58
ν,	Total Expenditure	48,408.24	51,258,89
	Net Profit/(Loss) before exceptional items	(15, 625, 66)	(18, 476, 31)
	Exceptional Items
	Net Profit/(Loss) (after OCI)	(15,650.02)	(18, 500.67)
ю.	Earnings Per Share	(21.79)	(25.71)
	Total Assets	69,846.58	69,846.88
И.	Total Liabilities	1,20,067,56	1,22,918.21
ю.	Net Worth	(50, 220.98)	(53,071,33)
10.	Any other financial item(s) (as felt appropriate by the management)	None	None

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II. Audit Qualification (each audit qualification separately);

a. Details of Audit Qualification:

A) Material Uncertainty Related to Going Concern

The Company continues to ficur losses resulting in an erosion of its net worth and its current liabilities exceeds current assets as of 31^st March 2024,

We draw your attention to Note 3 of the financial results as regards revocation of the existing restructured facilities (excluding the NCD and RPS facility) by JM Financial Asset Restructuring Company Limited (acting In its capacity as trustee of JMFARC-LVB Ceramics September 2014 - Trust). - (Financial Creditor), vide letter
dated 19 September 2022, whereby dues amounting to Rs. 2,42,762.93 Lakhs has been restated (the amount appearing in books as on 31^st March 2024 is Rs. 74,395.73Lakhs).

On 15th November 2022, the Financial Creditor has made an Application under Section 7 of Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with National Company Law Tribunal (NCLT) to initiate corporate insolvency resolution process.

Further, on 3^rd November 2023, the Hon'ble Debt Recovery Tribunal - I. Mumbal has passed an order against the Company & in favour of JMFARC Ltd (acting in its capacity as trustee of JMFARC- Corporation Bank Ceramics September 2015- Trust) W.r.t filing of Miscellaneous Application under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act and issued recovery certificate to the tune of Rs. 7,138.82 Lakhs alongwith interest @ 14.45 percent per annum compounded with monthly rests.

We are informed that the Company is seeking appropriate legal advice and will take all appropriate steps to protect its interest in both the aforesaid matters. Accordingly, no adjustments have been made to the carrying values of the liabilities and their presentation and classifications in the results and are accounted on going concern basis.

On 20th April, 2024 the Company has received communication from JMFARC notifying that pursuant to the Assignment Agreement dated 20th April, 2024, JMFARC has assigned the financial assets of the Company together with all underlying rights, titles, interests, securities, guarantees etc. thereof in fayour of Authum Investment & Infrastructure Limited ("AIIL")

Due to revocation of existing facilities of JMFARC and their filing of application with NCLT to initiate Corporate Insolvency Resolution Process, alongwith issuance of recovery certificate of Rs. 7,138.82 Lakhs by the Debt Recovery Tribunal in their favour, we have concluded that material uncertainty exists relating to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.
The Company has received a communication regarding the assignment of the financial assets of the
Company to Al avenues to raise funds, continue business operations and monetize its assets. The Company is in the process to conclude re-negotiation and obtain a replacement financing. Pending the outcome of the negotiations, we are not able to quantify the possible effects of this qualification on the Company's loss for the year and Company's financial position as at 31 March 2024.

Based on our audit conducted, we have concluded that material uncertainty exists relating to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern. Our opinion is modified in respect of this matter.

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· b. Type of Audit Qu lffcatlon ; Q.liall led Opinion

, Frequency of qOaljflcatlon: Slnce previous year

·•For Audit Q.Ua fflcatlo11(s) where t e lrppactis quantffle pplic;\ble

• For Audit Q.ilallflcii.tlon(s) Vl!)et'! th.e impact Is ~ot quantified y the auditor:

(j) ·Management's estimation.on the Impact of audit qualification: Refer Note e (fl) below

(Ii) If management Is unable to estimate the Impact, reasons for the same:

. As elaborate.d In note no. 3 to the financial results for the quarter and year ended March 31, 2024, the ompal\y Is ln the process to lnitlate Its negotiation with Authum Investment .a: Infrastructure Llmited ("AllL") for the restructuring/ extension of restructuring of Its facilities. Pending negotiations, no further adjustment ls1T1ade.

(Iii). Auditors' Comments on (Ii) above: The management does not have evidence to support its going concern . stlmate.s,. hence, we have concluded that a material uncertainty exists relating to events or cond!ttons that. may ast significant doubt on the entity's ablltty to .continue as a going concern and to that extent, the a.udlt report Is uallfled.

II, tidlt ffcatl . each

b. Details of Audit Qualification:

Non Provision of Interest on Outstanding Loan of UC We .draw attention to Note 4 to the/Inane/al results, Company hgs not provided interest on the outstanding loan of UC of Rs. 1,887.26 /akhs (Principal outstanding), as .It is hopeful of Its restructuring, This unilateral discontinuing of Interest accrual by the Company Is not In compliance with Ind AS 109 and has resulted In understatement of Interest expense and consequential loss for the year of the Standalone Company to the extent ofRs. 2,850.65 Lakhs.

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Our opinion is modified in respect of this matter.

, Type of Audit Qualification : o.aaurted Op nton

Frequency ofqµallflcatJon,: Ftrs.t Ye.ar

, For Audit Q,ua i. icatt0n(s) where the Impacts quantified by the audjtor, Management'.s Views:

As elaborated In note no. 4 of the .financial results for the quarter and year ended March 31, 2024, the Company is continuing its efforts to negotiate 1Yith UC for one time settlement I restructuring of its facility (principal outstanding R.s. 1,887.26 Lakhs as on 31,03,2024) on similar terms to restructuring done by JMFARC on January 23, 2018. Pending negotiations with LIC, no further adjustments, especially the provision of Interest amouotlogto Rs 2,850.65 Lakhs Is hot made.

(Ill) Auditors' comments on above: Same as mentioned above, No further comments to offer .

• for Audit Q,ualjfica.tlon(s) Where the Impact ls llot quantl led by the auditor: Not Applicable

. (I) Management's estimation on the impact of audit qualification:

(11) If management Is unable to estimate the impact, reasons for the same:.

(l1l) Auditors' Comments on (if) above: Notapplicable

III. Signatories: Scharchfecture ζV Harsh Kedia Sitahshu Satapathy Vivek Jálwar Chairman & Managing Director Audit Committee Chairman Chief Financial Officer DIN: 09784141 DIN: 00043180 τ٣ MUMBAI For M M Nissim & Co LLP Chartered Accountants Reg. No. 107122W/W100672 -4 $1\infty$ , N.Kashinath Partner Mem. No. 036490 Place: Mumba Date: 29 May 2024

Statement on Impact of Audit: Qualifications for the Islandial Year ended March S1, 2024 (Consolidated) [See Regulation 33 / 52 of the SEBI (LODR) (Amendment) Regulations, 2016]
	SI. No. Particulars	Audited Figures (as reported before adjusting for qualifications) (Rs. In Lakhs.)	Adjusted Figures (audited figures after adjusting for qualifications) (Rs, in Lakhs)
	Turnover / Total Income	33,008.28	33,008.28
	Total Expenditure	49,278.16	52,128.81
3.	Net Profit/(Loss) before exceptional items	(16, 269.88)	(19, 120.53)
	Exceptional Items
	Net Profit/(Loss) (after OCI)	(16, 288, 66)	(19, 139, 31)
6.	Earnings Per Share	(22.68)	(26.61)
	Total Assets	73,028.40	73,028,40
8.	Total Liabilities	1,25,969.90	1,28,820.55
9.	Net Worth	(52, 941, 50)	(55, 792, 15)
10.	Any other financial item(s) (as felt appropriate by the management)	None.	None

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II. Audit Qualification (each audit qualification separately);

Details of Audit Qualification: c.

Material Uncertainty Related to Going Concern

The Parent Company continues to incur losses resulting in an erosion of its net worth and its current liabilities exceeds current assets as of 31st March 2024.

We draw your attention to Note 3 of the financial results as regards revocation of the existing restructured facilities (excluding the NCD and RPS facility) by JM Financial Asset Restructuring Company Limited (acting in its capacity as trustee of JMFARC-LVB Ceramics September 2014 - Trust). - (Financial Creditor), vide letter dated 19 September 2022, whereby dues amounting to Rs. 2,42,762.93 Lakhs has been restated (the amount appearing in books as on 31st March 2024 is Rs. 74,395,73Lakhs).

On 15th November 2022, the Financial Creditor has made an Application under Section 7 of Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with National Company Law Tribunal (NCLT) to initiate corporate insolvency resolution process.

Further, on 3rd November 2023, the Hon ble Debt Recovery Tribunal - I, Mumbal has passed an order against the Parent Company & In favour of JMFARC Ltd (acting in its capacity as trustee of JMFARC- Corporation Bank Ceramics September 2015- Trust) w.r.t filing of Miscellaneous Application under Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act and issued recovery certificate
to the tune of Rs. 7,138.82 Lakhs alongwith interest @ 14.45 percent per annum compounded with monthly rests.

We are informed that the Parent Company is seeking appropriate legal advice and will take all appropriate steps to protect its interest in both the aforesaid matters. Accordingly, no adjustments have been made to the carrying values of the liabilities and their presentation and classifications in the results and are accounted on going concern basis.

On 20th April, 2024 the Parent Company has received communication from JMFARC notifying that pursuant to the Assignment Agreement dated 20th April, 2024, JMFARC has assigned the financial assets of the Group
together with all underlying rights, titles, interests, securities, guarantees etc. thereof in favour of Authum Investment & Infrastructure Limited ("AllL")

Due to revocation of existing facilities of JMFARC and their filing of application with NCLT to initiate Corporate Insolvency Resolution Process, alongwith issuance of recovery certificate of Rs. 7, 138.82 Lakhs by the Debt Recovery Tribunal in their favour, we have concluded that material uncertainty exists relating to events or conditions that may cast significant doubt on the Parent entity's ability to continue as a going concern. The Parent Company has received a communication regarding the assignment of the financial assets
of the Parent Company to AllL and is in the process of re-negotiating the terms with AllL. The Parent Company Is pursuing various avenues to raise funds, continue business operations and monetize its assets. The Parent Company is in the process to conclude re-negotiation and obtain a replacement financing. Pending the outcome of the negotiations, we are not able to quantify the possible effects of this qualification on the
Group's loss for the year and Group's financial position as at 31 March 2024.

Based on our audit conducted, we have concluded that material uncertainty exists relating to events or conditions that may cast significant doubt on the Parent entity's ability to continue as a going concern. Our opinion is modified in respect of this matter.

b. Type of Audit Qualif cation.: Qualified Opinion

• Frequency of qualification : Since previous year

. for. Audit Qualiflcation(s) where the impact is not quantified by the audito.r:

(l) Management's estimation on the impact of audit qualification: Not applicable

(11) If managem~nt is unablt;! to estimate the impact, reasons for the same:

s elaborated In note no. 3 to the flnanclal,results for the quarter and year ended March 31, 2024, the Parent ompany is In the process to in1Uate Its negotiation with Authum Investment ft Infrastructure Linilted ("AUL") for the restructuring/ extension of restructuring of its facilities. Pending negotiations, no further adjustment is made .

. (Iii) Auditors' Comme.nts on (ii) above: The managenient does not have evidence to support Its going concern ~tlniates, hence, we have concluded that a material uncertainty exists relating to events or .conditions that niay ast significant doubt on the parent entity .'s ablllty to continue as a going concern and to that extent, the audit ·report Is qualified.

II, fR:atlon ·se ar ·tel

a. Details of Audit Qualfflcatlon:

Non Provision of Interest on Outstqnding Lo11n of LIC

Refer Note 4 to the financial results, the Parent Company has not provided interest on the outstanding loan of LfC of Rs. 1,887,26 .. lakhs (Principal outstanding), as ft Is hopeful of its restructuring. This unilateral discontinuing of Interest accrual by the Parent Company Is not tn compliance with Ind AS 109 and has resulted In understatement of Interest expense and cansequentlal lossfor the year of the Group to the extent of Rs. 2,850.65 Lakhs,

Our opinion fs modified in respect of this matter.

• TYPe.'1f Al!dlt Q.uaUflcatiQn : Qualified Opinion

• Frequency o !lualif Q.atton : first . ear

. For AudltQuall(lcatlon(s) .where the impact Is quantified by the auditor, Management's Vi,;.ws:

As elaborated In note no. 4 of the financial results for the quarter and year ended March 31, 2024, the Parent Company Is continuing Its efforts to negotiate .with UC for one. time settlement I restructuring of Its facility (principal outstallding Rs. 1,887.26 Lakhs as on 31.03.2024) on similar terms to restructuring done by JMFARC on January 23, 2018. Pending negotiations .with UC, no further adjustments, especially the provision of Interest amounting to Rs 2,850.65 Lakhs Is not made.

(ltl) Aµdltors' Comments on above: Same as mentioned above. No further comments to offer •

. For AudltQuallficatlon(s) wJj<>f<! tJj,; impact ts not qUilntlfled by the auditor: Not Appllc~ble

(1) Management's estimation on the Impact of audit qualification:

(ii) If management Is unable to estimate the impact, reasons for the same:

(Iii) Auditors' Comments on (Ii) above: Not applicable

III. Signatories: $\ell$ $\int$ de Sitanshu Satapathy Vivek Talwai Harsh Kedia Chairman & Managing Director Audit Committee Chairman Chief Financial Officer pin: 00043180 DIN: 09784141 MUMBAI For M M Nissim & Co LLP Chartered Accountants Reg. No. 107122W/W100672 N.Kashinath Partner Mem.No. 036490 Place: Mumbai 2024 May Date: 29