Morarjee Textiles Limited has received approval from the National Company Law Tribunal (NCLT), Mumbai Bench — I, for the Resolution Plan submitted by Shrinivas Spintex Industries Private Limited (SSIPL) as the Successful Resolution Applicant (SRA). The order, delivered on May 11, 2026, under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), concludes the Corporate Insolvency Resolution Process (CIRP) that commenced on February 09, 2024, following an application filed by Axis Bank Limited as the financial creditor. The Resolution Plan carries a total infusion value of INR 156 crores and was approved by the Committee of Creditors (CoC) with a voting share of 75.61% in the 22nd CoC meeting held on February 04–05, 2025. The disclosure was made by the company under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and was signed by Kishore Dhage, CEO, Whole Time Director & Compliance Officer of Morarjee Textiles Limited.

CIRP Timeline and Process

The CIRP of Morarjee Textiles was initiated on February 09, 2024, with Mr. Ravi Sethia appointed as the Interim Resolution Professional (IRP). A public announcement was issued on February 12, 2024, and the CoC was constituted on March 03, 2024, with its first meeting held on March 13, 2024. Mr. Ravi Sethia was subsequently confirmed as the Resolution Professional in the third CoC meeting on May 15, 2024. The Expression of Interest (Form-G) was published on May 01, 2024, and a final list of 33 Prospective Resolution Applicants (PRAs) was issued on July 02, 2024. Three PRAs — Dev Land & Housing Pvt. Ltd., Nirmal Ujjwal Credit Co-operative Society Ltd., and Shriniwas Spintex Pvt. Ltd. — submitted Resolution Plans along with an Earnest Money Deposit of Rs. 5,00,00,000 each. Following disqualification of the other two applicants under Section 29A of the IBC, only SSIPL's plan remained compliant. The 180-day CIRP period expired on August 07, 2024, and was extended six times, with the final extended CIRP period ending on April 28, 2025. The Resolution Plan application was filed on April 19, 2025, within the subsisting CIRP period.

Resolution Plan Value and Creditor Distribution

The total Resolution Plan value of INR 156 crores covers payments to all stakeholder categories, in addition to a proposed working capital infusion. The SRA has proposed to infuse INR 25 crores as initial working capital (depending on the requirements of the company), out of which INR 9 crores will be infused upfront as fresh equity. The breakup of the INR 156 crore resolution amount is as follows:

The total admitted claims stood at INR 8,92,30,27,478 (approximately INR 892.30 crores). The realisable amount under the plan represents 17.48% of total admitted claims and 25.03% of the principal amount. Against the average fair value of INR 229,01,08,807 and average liquidation value of INR 1,40,48,25,261 (as per Regulation 35 of CIRP Regulations), the resolution amount represents 68.12% of fair value and 111.05% of liquidation value.

CoC Voting and Objection

The Resolution Plan was approved by 75.61% of the CoC voting share. The CoC comprised ten financial creditors, with Indian Bank (30.37%) and Axis Bank Limited (30.10%) assenting, while ACT Fininvest Limited (16.79%), Kotak Mahindra Bank Limited (3.57%), Renato Finance & Investment Pvt. Ltd. (0.93%), and Myra Mall Management Company Pvt. Ltd. (0.56%) dissented. IDBI Bank Ltd (2.55%) did not vote.

ACT Fininvest Limited, an unsecured financial creditor holding 16.79% voting rights, filed IA (IBC) No. 2316/2025 challenging the Resolution Plan, alleging that unsecured financial creditors — with admitted claims of approximately Rs. 128.46 crores — were allocated only Rs. 39 lakhs (approximately 0.07% of their admitted claims), while approximately Rs. 130 crores was allocated to secured creditors. The NCLT dismissed this objection, noting that the average liquidation value of the corporate debtor (Rs. 140.48 crores) was less than the admitted claims of secured financial creditors (Rs. 625.03 crores), making the liquidation value available to unsecured financial creditors NIL under Section 53 of the IBC. The Tribunal held that differentiation between sub-classes of financial creditors is permissible, provided each sub-class receives at least the liquidation value attributable to it.

Net Worth, Shareholding Restructuring, and Capital Changes

The pre-CIRP net worth of Morarjee Textiles as on March 31, 2024 stood at INR (47,975) lacs. The post-CIRP net worth as on the date of the NCLT order (May 11, 2026) is not available, as the financials have not been prepared by the corporate debtor due to the ongoing stress in the company.

The Resolution Plan entails a significant restructuring of the corporate debtor's share capital. The entire existing shareholding held by the erstwhile promoter and promoter group, aggregating 59.71%, shall stand cancelled and extinguished. The equity shareholding of existing public shareholders (other than the promoter group and related parties), aggregating to 21,694,663 equity shares constituting approximately 36.13% of the existing share capital, will be reduced in the ratio of 1:30 — meaning one equity share shall be retained for every thirty equity shares held. Post-implementation, the SRA along with its affiliates will hold 94.9% of the equity, while public shareholding will stand at 5.1%, maintained at or above the minimum level prescribed under Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957. No delisting of the equity shares is presently contemplated under the approved Resolution Plan.

Implementation Framework

The Resolution Plan implementation will commence from the receipt of the certified copy of the NCLT order. An Implementation and Monitoring Committee (IMC) — comprising the Resolution Professional, one nominee of the SRA, and one nominee of the Secured Financial Creditors — will be formed on the same date. Within T+60 days (Effective Date), payment of unpaid CIRP costs and upfront amounts to stakeholders will be made. Full payment to all stakeholders and complete implementation of the Resolution Plan is to be completed by T+360 days (Completion Date). The sources of funds for the INR 156 crore resolution amount include inter-corporate deposits, unsecured loans from friends and relatives, internal accruals, sale of immovable properties of directors and shareholders, and loans against properties from directors, shareholders, and other financial institutions. The moratorium under Section 14 of the IBC has ceased to have effect from the date of the NCLT order.

Resolution Applicant Profile

Shrinivas Spintex Industries Private Limited (SSIPL), the SRA, has over 10 years of experience in the spinning industry. The company manufactures 100% cotton yarn, including carded and compact varieties in counts of 20' to 60' (40' count mainly), and also processes cotton bales. SSIPL operates approximately 69,000 spindles at full capacity across its group entities, including Viyan Tex Industries LLP (24,000 spindles at Hinganghat). The group is also establishing a new spinning mill, Shivay Spinning Mill Private Limited, with a capacity of 25,000 spindles, along with a cotton ginning and pressing unit employing around 200 workmen. SSIPL holds an IVR BB+ credit rating as per Infomerics Ratings.

The shareholding structure of SSIPL is as follows:

SSIPL's board brings expertise across textile manufacturing, agriculture, and project management. Mr. Govind Rathi, Director, is a commerce graduate with 15 years of experience managing key activities of the family concerns and has played a central role in developing the business from trading of cotton to establishing ginning, pressing, and oil mill units. Mr. Gopal Rathi, Director, has over 40 years of experience in cotton ginning, pressing, and trading, and has also promoted the Resolution Applicant.

SSIPL Financial Performance

The brief financials of SSIPL for the past three financial years are presented below (figures in crores unless stated):

Save and except the liabilities and obligations proposed to be continued, assumed, settled, or otherwise dealt with under the approved Resolution Plan, claims and liabilities of the corporate debtor arising on or prior to the insolvency commencement date shall stand dealt with in accordance with the terms of the approved Resolution Plan read with the NCLT order under Section 31 of the Code.

Morarjee Textiles Limited , a prominent player in the Indian textile industry, has reported a significant increase in net losses for the half year ended September 30, 2020. The company continues to face headwinds due to the COVID-19 pandemic and other financial challenges.

Financial Performance

The company's financial results for the half year paint a challenging picture:

The substantial increase in net loss and the sharp decline in revenue underscore the severe impact of the COVID-19 lockdown on Morarjee Textiles' operations.

Operational Challenges

Morarjee Textiles faced significant operational hurdles during the period:

1. COVID-19 Impact: The lockdown affected production and sales for almost two months, resulting in very low demand.
2. Export Performance Guarantee: An export performance bank guarantee of USD 16.15 million (approximately ₹11,891.00 lakhs) was invoked due to non-payment of service fees and interest.
3. Preference Shares Redemption: The company has been unable to redeem preference shares worth ₹10.00 crores that were due in November 2019.

Management's Response

Despite the challenges, the management has expressed confidence in arranging sufficient liquidity. They have taken proactive steps to address the financial situation:

1. NCLT Approach: The company has approached the National Company Law Tribunal (NCLT) for re-issuance of preference shares for a 20-year term.
2. Liquidity Management: Efforts are underway to improve the company's liquidity position.

Recent Financial Trends

Analyzing the most recent quarterly data available, some concerning trends emerge:

While there's a quarter-on-quarter increase in revenue, the company's losses have widened significantly, indicating persistent challenges in its operations and financial management.

Outlook

The textile industry continues to face headwinds due to global economic uncertainties and the lingering effects of the pandemic. Morarjee Textiles' ability to navigate these challenges, improve its operational efficiency, and strengthen its financial position will be crucial for its future performance.

Investors and stakeholders will be closely watching the company's efforts to restructure its debt, improve liquidity, and return to profitability in the coming quarters.