**Morarjee Textiles Limited** is a long-standing Indian textile manufacturer currently navigating a critical restructuring phase. Since **February 09, 2024**, the company has been undergoing the **Corporate Insolvency Resolution Process (CIRP)** under the **Insolvency and Bankruptcy Code, 2016 (IBC)**. The process was initiated by the **National Company Law Tribunal (NCLT)**, Mumbai Bench, following a default on a term loan of **₹175 crore** to **Axis Bank Limited**. Currently, the powers of the Board of Directors are suspended, and the company’s management, assets, and operations are overseen by the **Resolution Professional (RP), Mr. Ravi Sethia**. --- ### **Core Manufacturing Operations & Infrastructure** The company operates as a single-segment entity focused exclusively on **Textile Products**, primarily the manufacture of high-quality yarn and processed fabrics. * **Primary Facility:** A major manufacturing plant located at **Plot No. G-2, MIDC, Butibori, Nagpur**, Maharashtra. * **Joint Venture:** The company maintains a **50% stake** in **Morarjee Castiglioni (India) Private Limited**, which represents its sole joint venture interest. * **Operational Volatility:** Manufacturing has been severely hampered by industrial unrest and utility issues: * A major labor strike halted operations from **April 17, 2023, to October 26, 2023**. * Partial operations resumed on **November 09, 2023**, following power restoration. * Recent utility disruptions occurred as recently as **August/September 2024** due to power supply issues. * **Capacity Utilization:** Operations are currently running at **sub-optimal levels** due to acute working capital shortages and the aftermath of the prolonged strike. | Feature | Details | | :--- | :--- | | **Registered Office** | Mathuradas Mills Compound, Lower Parel, **Mumbai - 400013** | | **Listing Status** | Listed on **BSE (532621)** and **NSE (MORARJEE)** | | **Key Leadership** | **Mr. Kishor Dhage** (CEO & Whole-Time Director, appointed Oct 2023) | | **Regulatory Status** | Under **CIRP** (Insolvency) | --- ### **Financial Distress & Solvency Profile** The company is facing a severe liquidity crisis characterized by a **complete erosion of net worth** and a massive deficit in working capital. * **Accumulated Losses:** As of **March 31, 2024**, accumulated losses stood at **₹561.45 crore**. * **Net Loss:** The company reported a net loss of **₹201.28 crore** for **FY 2023-24**. * **Asset-Liability Mismatch:** Current liabilities exceed current assets by **₹858.01 crore**. * **NPA Classification:** All major loan accounts have been classified as **Non-Performing Assets (NPA)** by lenders, with effective interest rates ranging from **10.45% to 13.50%**. #### **Default on Borrowings (Interest Defaults as of Sept 2023)** | Lender | Interest Default (Current) | Interest Default (Previous Year) | | :--- | :--- | :--- | | **Indian Bank Limited** | **₹55.18 crore** | **₹27.50 crore** | | **Axis Bank Limited** | **₹45.49 crore** | **₹26.23 crore** | | **Kotak Mahindra Bank Limited** | **₹13.28 crore** | **₹7.43 crore** | | **Tata Capital Financial Services** | **₹8.95 crore** | **₹5.25 crore** | | **Federal Bank Limited** | **₹6.74 crore** | **₹3.83 crore** | | **IDBI Bank Limited** | **₹6.53 crore** | **₹3.38 crore** | --- ### **Insolvency Resolution & Strategic Transition** The company’s survival is contingent upon the successful execution of a resolution plan under the IBC framework. * **Resolution Progress:** On **May 1, 2024**, the company issued an **Invitation for Expression of Interest (IEOI)**. As of **August 27, 2024**, **3 (three) Resolution Plans** have been received from potential applicants. * **Applicant Criteria:** Prospective resolution applicants were required to have a minimum net worth of **₹25 crore** at the group level. * **Preference Share Obligations:** * **5% Preference Shares:** Overdue since **November 2019**. An NCLT application for a **20-year re-issuance** was dismissed for non-prosecution in Dec 2023. * **9% Preference Shares:** Redemption has been extended to **December 3, 2026**. --- ### **Macro-Economic Context & Industry Growth Drivers** Despite internal financial turmoil, Morarjee Textiles operates in a sector with robust long-term fundamentals and significant government support. * **Market Opportunity:** The Indian textile market is projected to reach **US$ 209 billion by 2029**. * **Digitalization:** The rise of **e-commerce** is allowing manufacturers to bypass traditional weaving clusters and reach a global customer base. * **Sustainability:** Increasing consumer demand for **eco-friendly practices** and sustainable fashion is reshaping manufacturing standards. * **Government Initiatives:** * **PM MITRA Parks:** Development of mega textile parks across 7 states, including **Maharashtra**. * **Technology Upgradation Fund (TUFS):** **US$ 961.11 million** allocated for modernization. * **SITP:** **US$ 184.98 million** dedicated to integrated textile parks. --- ### **Critical Risk Factors** #### **1. Operational & Human Capital Risks** * **Labor Relations:** A history of prolonged strikes and the expiration of the **Long Term wage agreement** present ongoing risks to production stability. * **Attrition:** Significant loss of **Key Managerial Personnel (KMP)** and finance staff has led to delays in financial reporting and statutory compliance. * **Asset Security:** Recent reports of **theft of cotton bales** and machinery parts at the Nagpur plant highlight vulnerabilities in inventory management. #### **2. Legal & Regulatory Contingencies** * **Moratorium:** Under **Section 14 of the IBC**, all existing civil legal proceedings against the company are currently in abeyance. * **Taxation Claims:** The Customs Commissionerate (Nagpur) has filed a claim of **₹58.73 crore** related to **EPCG licenses** and saved duties. * **Subsidy Uncertainty:** There is significant doubt regarding the recovery of **₹5.43 crore** in capital subsidies from the Maharashtra government and the utilization of **₹15.78 crore** in GST input tax credits. #### **3. Market & Supply Chain Risks** * **Raw Material Volatility:** Exposure to fluctuating cotton prices and global supply shifts driven by environmental regulations in China and Europe. * **Global Competition:** Intense pricing pressure from low-cost manufacturing hubs in **Bangladesh, Sri Lanka, and China**. * **Utility Costs:** Rising power costs and labor wages in Indian textile hubs (Mumbai, Nagpur) continue to compress margins.