We hereby submit the statement of Impact of Audit Qualification for the year ended March 31, 2024
Awaiting price reaction for this filing.
Modern Denim Limited has filed the statement of impact of audit qualification, which is a qualified opinion from the auditor. The company reported a turnover of Rs. 2,517.23 lakhs and a net loss of Rs. 533.52 lakhs for FY24. If the audit qualifications were adjusted, the loss would balloon to Rs. 767.13 lakhs. The auditor flagged that the company has not recognised interest on cumulative redeemable preference shares (Rs. 110.75 lakhs for the year, cumulative Rs. 3,670.11 lakhs) and on certain secured and unsecured borrowings (Rs. 123.46 lakhs for the year, cumulative Rs. 2,300.32 lakhs). Additionally, non-current borrowings of Rs. 6,374 lakhs were not measured at fair value. Net worth is deeply negative at Rs. -6,071.20 lakhs (reported) or Rs. -12,041.63 lakhs (adjusted), and total liabilities stand at Rs. 9,727.72 lakhs (reported) or Rs. 15,697.85 lakhs (adjusted). The qualifications are repetitive from the previous year.
This is a serious red flag for shareholders. The company's negative net worth and mounting unrecognised interest obligations suggest a going-concern risk. Management is pinning hopes on a scheme of compromise, arrangement and amalgamation under Sections 230-232 of the Companies Act, 2013, pending approval. The stock is likely to remain under pressure until the resolution plan is approved, and there is significant risk for existing equity holders.