Impex Ferro Tech Ltd:Annual Report 2023-24 Analysis

Impex Ferro Tech Ltd. - A Comprehensive Overview #

About the Company: #

• Year of Establishment and Founding History: Established in 1995.
• Headquarters Location: Kolkata, India.
• Company Vision and Mission: (Data not readily available. Requires direct company sources.)
• Key Milestones in their Growth Journey: (Data not readily available. Requires direct company sources.)
• Stock Exchange Listing Details and Market Capitalization: Listed on the Bombay Stock Exchange (BSE: 532625). Market capitalization fluctuates based on market conditions. Consult financial websites for current data.
• Recent Financial Performance Highlights: (Recent financial performance requires consulting the company’s financial reports and disclosures on stock exchange websites like the BSE.)
• Management Team and Leadership Structure: (Data not readily available. Requires direct company sources such as the company website’s “About Us” or “Leadership” section, or official company announcements.)
• Any Notable Awards or Recognitions: (Data not readily available. Requires direct company sources.)

Their Products: #

• Complete Product Portfolio with Categories: Primarily focused on Ferro Alloys. Major products include:
  • Ferro Silicon
  • Ferro Chrome
  • Silico Manganese
• Flagship or Signature Product Lines: Ferro Silicon, Ferro Chrome.
• Manufacturing Facilities and Production Capacity: (Production capacity details may be available in the company’s annual reports or investor presentations.)
• Quality Certifications and Standards: (Data not readily available. Requires direct company sources.)
• Recent Product Launches or R&D Initiatives: (Data not readily available. Requires direct company sources.)

Primary Customers: #

• Target Industries and Sectors: Steel Industry.
• Geographic Markets (domestic vs. international): Primarily India, with exports to various countries.
• Distribution Network and Sales Channels: (Data not readily available. Requires direct company sources.)

Major Competitors: #

• Direct Competitors in India and Globally:
  • Tata Steel
  • Jindal Steel & Power Ltd.
  • Sarda Energy & Minerals Ltd.
  • Hindustan Copper Ltd.
• Competitive Advantages and Disadvantages: (Requires in-depth market analysis and competitor analysis. Information is not readily available without conducting extensive research.)
• Industry Challenges and Opportunities: (Requires in-depth market analysis and competitor analysis. Information is not readily available without conducting extensive research.)

Future Outlook: #

• Expansion plans or growth strategy: (Data not readily available. Requires direct company sources.)
• Sustainability initiatives or ESG commitments: (Data not readily available. Requires direct company sources.)
• Industry trends affecting their business: Fluctuations in steel demand, raw material price volatility (e.g., chrome ore, manganese ore), environmental regulations, and technological advancements in ferroalloy production all significantly affect the business.
• Long-term vision and strategic goals: (Data not readily available. Requires direct company sources.)

Financial Analysis of Impex Ferro Tech Limited (FY 2023-24) #

Disclaimer #

This analysis is based solely on the provided Annual Report extract for Impex Ferro Tech Limited (IFTL) for the financial year ending March 31, 2024. The company is under Corporate Insolvency Resolution Process (CIRP) effective May 2, 2024, with a Resolution Professional (RP) managing its affairs. The RP and auditors have noted significant limitations in accessing complete historical records and cooperation from previous Key Managerial Personnel (KMPs).

Key Financial Metrics Trend Analysis (2-Year) #

A comprehensive 3-year trend analysis is not possible as data for FY 2021-22 is not explicitly provided. Analysis is limited to FY 2023-24 and FY 2022-23.

Detailed Analysis #

Financial Position: Impex Ferro Tech Limited (Under CIRP) - FY 2023-24 #

Key Considerations #

Impex Ferro Tech Limited was admitted into Corporate Insolvency Resolution Process (CIRP) on May 2, 2024. Significant limitations exist in accessing complete historical records due to the resignation of Key Managerial Personnel (KMP) and the unapproachability of the Managing Director. The manufacturing plant has been non-operational since October 2022. The statutory auditors have issued a Qualified Opinion on the FY 2023-24 financial statements, citing non-provision of interest expenses, uncertainties regarding Expected Credit Losses (ECL) on receivables and advances, and pending reconciliation of CIRP claims.

Balance Sheet Analysis: Comparative Analysis of Assets, Liabilities, and Equity (2-Year) #

A 2-year comparison is presented.

Key Performance Indicators #

Financial Analysis of Impex Ferro Tech Limited (FY 2023-24) #

Revenue and Profitability Metrics with Growth Rates #

Financial Risk Analysis: Impex Ferro Tech Limited (FY 2023-24) #

Overview #

Impex Ferro Tech Limited is under Corporate Insolvency Resolution Process (CIRP) effective May 2, 2024. This analysis is based on the Annual Report for FY 2023-24, including disclosures by the Resolution Professional (RP).

Strategic Risks #

Viability as a Going Concern / CIRP Outcome #

• Severity: Critical
• Likelihood: Certain (CIRP is underway)
• Trend: Deteriorated significantly post-FY24
• Mitigation Strategies: CIRP
• Control Effectiveness: Suspended
• Potential Financial Impact: Total loss of shareholder value, write-offs for creditors, or a significantly altered capital structure.

Business Model Sustainability #

• Severity: Critical
• Likelihood: Certain (plant is shut)
• Trend: Stable (shutdown ongoing since FY23)
• Mitigation Strategies: Dependent on CIRP
• Control Effectiveness: Failed
• Potential Financial Impact: Continued zero revenue from core manufacturing.

Operational Risks #

Plant Non-Operation & Asset Deterioration #

• Severity: Very High
• Likelihood: Certain
• Trend: Ongoing negative stability
• Mitigation Strategies: Minimal pre-CIRP, outcome of CIRP is the only potential mitigation.
• Control Effectiveness: Ineffective
• Potential Financial Impact: No production output, accelerated depreciation, potential loss from uninsured events.

Loss of Key Managerial Personnel (KMP) & Record Accessibility #

• Severity: High
• Likelihood: Certain (KMPs have resigned)
• Trend: Significant adverse development post-FY24
• Mitigation Strategies: RP is managing affairs with limitations.
• Control Effectiveness: Severely compromised
• Potential Financial Impact: Delays in CIRP, potential for undiscovered liabilities, increased costs for forensic audits.

Inadequate Internal Financial Controls (IFC) #

• Severity: Medium to High
• Likelihood: High
• Trend: Deteriorating around year-end and post-FY24
• Mitigation Strategies: RP’s oversight
• Control Effectiveness: Weakened significantly
• Potential Financial Impact: Increased risk of fraud, errors in financial reporting, and non-compliance.

Financial Risks #

Severe Liquidity Crisis & Financial Distress #

• Severity: Critical
• Likelihood: Certain
• Trend: Critical and worsening YoY
• Mitigation Strategies: CIRP
• Control Effectiveness: Previous financial controls failed
• Potential Financial Impact: Inability to meet financial obligations, potential liquidation.

Debt Burden & Non-Provisioning of Interest #

• Severity: Critical
• Likelihood: Certain
• Trend: Increasing financial burden
• Mitigation Strategies: Restructuring through CIRP
• Control Effectiveness: Failed
• Potential Financial Impact: Erosion of net worth, potential legal action by creditors.

Strategic Analysis of Impex Ferro Tech Limited #

Long-term Strategic Goals and Progress #

Prior to the Corporate Insolvency Resolution Process (CIRP), Impex Ferro Tech Limited invested Rs. 2,358.77 lakhs in FY 2023-24 to revamp its Captive Power Plant (CPP) and Ferro Alloys Plant. While the Management Discussion and Analysis (MD&A) referenced the ferroalloy industry’s linkage to the iron and steel sector and the National Steel Policy 2017, the manufacturing plant has remained non-operational since October 2022.

The company’s progress towards long-term goals has been superseded by its financial distress and admission into CIRP effective May 2, 2024. The immediate strategic goal is the successful resolution of the insolvency process.

Competitive Advantages and Market Positioning #

Impex Ferro Tech Limited was a manufacturer of ferroalloys in Eastern India. While the MD&A suggested potential in the Indian ferroalloy industry, the manufacturing plant’s shutdown since October 2022 and the initiation of CIRP have undermined the company’s competitive standing.

The company reported no income-generating business operations during the latter part of the review period, leading to an 80.82% decline in revenue from operations in FY24.

ESG Framework #

ESG and Sustainability Analysis #

Financial Analysis: Impex Ferro Tech Limited (Under CIRP) - FY2023-24 #

Executive Summary & Current Status #

Impex Ferro Tech Limited is undergoing a Corporate Insolvency Resolution Process (CIRP) initiated on May 2, 2024. The financial year 2023-24 was marked by a severe decline in operational and financial performance, with the manufacturing plant remaining non-operational since October 2022. The Company reported a significant reduction in revenue and continued to incur substantial losses, leading to a negative net worth. The Statutory Auditors issued a Qualified Opinion on the FY 2023-24 financial statements, citing several material concerns. The future of the Company is entirely dependent on the outcome of the CIRP.

Key Developments (FY2023-24 & Post-Balance Sheet Events) #

• CIRP Initiation: Admitted into CIRP on May 2, 2024.
• Operational Halt: The manufacturing plant at Kalyaneshwari, West Bengal, has been non-operational since October 2022.
• KMP Resignations: The Company Secretary (CS) and Chief Financial Officer (CFO) resigned on April 11, 2024.
• Limited Records & Non-Cooperation: Significant challenges in accessing statutory records and finalizing financial results.
• AGM Extension: An extension for holding the 29th AGM was approved by NCLT, with the AGM scheduled for June 10, 2025.
• Director Resignation (Post-FY): Ms. Sujata Agarwal resigned as Director effective March 3, 2025.
• ED Attachment: Assets valued at ₹6.60 crore remain attached under a PMLA order.
• Insurance Expiry: Insurance coverage for properties and assets expired on June 13, 2023.

Financial Performance Analysis (FY2023-24) #

• Revenue from Operations: Decreased by 80.82% to ₹27.50 crore in FY2023-24 from ₹143.38 crore in FY2022-23.
• Other Income: Stood at ₹1.14 crore (FY24) compared to ₹0.08 crore (FY23).
• Profitability:
  • Profit before Finance Cost, Depreciation, and Tax: Loss of ₹30.40 crore (FY24) compared to a loss of ₹34.45 crore (FY23).
  • Net Loss after Tax: ₹29.83 crore (FY24) compared to a net loss of ₹33.60 crore (FY23).
• Balance Sheet Position (as of March 31, 2024):
  • Net Worth: Negative at ₹362.10 crore.
  • Borrowings:
    • Non-Current Borrowings: ₹267.60 crore
    • Current Borrowings (Working Capital Loans from Banks): ₹8.84 crore.
  • Trade Payables (Current): ₹167.97 crore.
  • Inventories: ₹29.65 crore.
  • Trade Receivables (Current): ₹6.36 crore (net of ECL allowance of ₹4.11 crore).
• Cash Flow:
  • Net Cash from Operating Activities: ₹20.48 crore (FY24) vs ₹4.06 crore (FY23).
  • Net Cash used in Investing Activities: ₹20.84 crore (FY24) vs ₹1.83 crore (FY23).
  • Net Cash used in Financing Activities: ₹0.27 crore (FY24) vs ₹2.63 crore (FY23).

Auditor’s Opinion and Key Audit Matters (FY2023-24) #

Statutory Auditors, M/s. J. B. S. & Associates, have issued a Qualified Opinion on the financial statements.

• Basis for Qualified Opinion:
  1. Non-provision of Interest Expense: Non-provision of interest expense of ₹68.60 crore for FY2023-24.
  2. Expected Credit Loss (ECL) on Receivables: Auditors were unable to comment on the carrying amount of receivables.
  3. Balances Subject to Confirmation: Trade payables, advances from customers, and advances to suppliers are subject to confirmation/reconciliation.
  4. CIRP Claims Reconciliation: Creditor claims submitted under CIRP exceed book amounts and are pending verification and reconciliation.
  5. Confidential CIRP Information: Certain CIRP information deemed confidential was not shared.

Financial Analysis Report: Impex Ferro Tech Limited (FY 2023-24) #

Auditor’s Opinion and Qualifications #

The Independent Auditor, M/s. J. B. S. & Company, issued a Qualified Opinion on the Financial Statements for the year ended March 31, 2024.

Bases for Qualified Opinion: #

• Non-provision of Interest Expense: Failure to provide for interest expense on borrowings amounting to Rs. 4,048.39 lakhs for FY 2023-24 (cumulative non-provisioning of Rs. 23,814.49 lakhs till March 31, 2024). This is not in accordance with Ind AS 23 (Borrowing Costs) and Ind AS 109 (Financial Instruments).
• Expected Credit Loss (ECL) Uncertainty: Provisioning of ECL of Rs. 313.60 lakhs on Trade Receivables and Rs. 393.53 lakhs on Advances to parties was based on management’s prudence due to long non-realization. The auditors were unable to comment on the carrying amount of these receivables due to a change in ECL policy.
• Balance Confirmations: Trade payables, Advances from Customers, Advances to Suppliers, and other party balances are subject to confirmation/reconciliation. The auditors could not comment on the recoverability of these balances.
• CIRP Claims Verification: Claims submitted by financial and operational creditors under the Corporate Insolvency Resolution Process (CIRP) exceeded amounts in the books. The verification and reconciliation process is ongoing, and no accounting impact for differences has been made.
• Limited Access to CIRP Information: Certain confidential information related to the CIRP (e.g., Committee of Creditors meeting minutes) was not shared, preventing the auditors from commenting on possible financial impacts, presentation, and disclosures.

Material Uncertainty Relating to Going Concern: #

The auditors highlighted a material uncertainty regarding the company’s ability to continue as a going concern due to accumulated losses, erosion of net worth, and liabilities exceeding assets. The appropriateness of the going concern basis for financial statement preparation is critically dependent on the outcome of the ongoing CIRP.

Emphasis of Matter: #

• Non-provision of arrear electricity bills of Rs. 968.54 lakhs demanded by Damodar Valley Corporation (DVC), which is under challenge and pending before the Appellate Tribunal for Electricity (APTEL).

Key Audit Matters: #

• Claims and exposure relating to taxation litigation, including disputed claims/levies under various taxes and legal matters.

Key Accounting Policies and Changes #

The financial statements are prepared under the historical cost convention on an accrual basis, in accordance with Indian Accounting Standards (Ind AS).

Significant Policies: #

Include recognition of financial instruments (amortized cost, FVTOCI, FVTPL), property, plant & equipment (cost less accumulated depreciation and impairment), intangible assets (cost less accumulated amortization and impairment), inventories (lower of cost and net realizable value), impairment of financial and non-financial assets, revenue recognition, income tax (current and deferred), and borrowing costs.

Changes in Accounting Policy: #

The auditor’s qualification noted a “change the ECL policy” for receivables, which contributed to their inability to comment on the carrying amount of such receivables.

Internal Control Effectiveness #

The Independent Auditor’s Report on Internal Financial Controls over Financial Reporting states that, in their opinion, the company has an adequate internal financial controls system over financial reporting and such internal financial controls were operating effectively as at March 31, 2024.

Regulatory Compliance Status #

The Secretarial Audit Report for FY 2023-24 highlights extensive non-compliances:

Companies Act, 2013: #

• Non-filing/incorrect filing of forms (MGT-14, DPT-3, MSME dues).
• Advances from customers unappropriated for over 365 days (potential violation of deposit rules).
• Outdated company website and incomplete Annual Report (FY 2022-23) online.
• Statutory registers not updated; delays in MCA filings.

SEBI (LODR) Regulations, 2015: #

• Delayed publication of financial results (Reg 47)