Digjam Limited Reports Q2 Results: Net Loss Widens Amid Operational Challenges
Digjam Limited reported a net loss of Rs 174.29 crore for Q2 ended September 30, up from Rs 78.29 lakh loss in the same quarter last year. Revenue from operations surged by 169.17% to Rs 1,413.99 lakhs. The company faces challenges including a working capital deficit and discontinued operations at its Jamnagar facility. Despite these issues, the Board has approved a Scheme of Arrangement with Reid and Taylor International Private Limited, involving a demerger of RTIL's Textile undertaking into Digjam Limited.
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Digjam Limited (BSE: 539979, NSE: DIGJAMLMTD) has released its financial results for the quarter ended September 30, revealing a challenging period for the textile company. The firm reported a net loss of Rs 174.29 crore for Q2, a significant increase from the Rs 78.29 lakh loss reported in the same quarter of the previous year.
Financial Performance
The company's financial performance for Q2 shows mixed results across various segments:
| Particulars (in Rs Lakhs) | Q2 | Q2 (Previous Year) | Change (%) |
|---|---|---|---|
| Revenue from Operations | 1,413.99 | 525.32 | +169.17% |
| Total Income | 1,420.71 | 525.32 | +170.45% |
| Profit/(Loss) from Continued Operations | 86.27 | 86.41 | -0.16% |
| Loss from Discontinued Operations | (260.56) | (1,258.51) | -79.30% |
| Net Loss | (174.29) | (1,172.11) | -85.13% |
Despite a significant increase in revenue, the company's bottom line remains under pressure, primarily due to losses from discontinued operations.
Operational Challenges
Digjam Limited faces several operational challenges:
Working Capital Deficit: As of September 30, the company's current liabilities exceeded its current assets by Rs 2,192.12 lakhs, indicating potential liquidity issues.
Discontinued Operations: The company has discontinued operations at its manufacturing facility in Jamnagar, effective March 31. Assets related to this facility, valued at Rs 5,339.42 lakhs, are now classified as Non-Current Assets Held for Sale.
Going Concern: Despite these challenges, the financial statements have been prepared on a going concern basis. Management expresses confidence in implementing operational and financial strategies to address these issues.
Strategic Developments
The Board of Directors has approved a Scheme of Arrangement with Reid and Taylor International Private Limited (RTIL). Key points of this arrangement include:
- Demerger of RTIL's Textile undertaking into Digjam Limited.
- Shareholders of RTIL will be allotted shares of Digjam.
- The appointed date for the scheme is July 1.
- Implementation is subject to necessary approvals and fulfillment of stated conditions.
Outlook
While Digjam Limited faces significant challenges, the management's strategic initiatives, including the proposed demerger and asset realization plans, may provide avenues for potential turnaround. However, the company's ability to overcome its working capital deficit and successfully transition from discontinued operations remains crucial for its future performance.
Investors and stakeholders should closely monitor the progress of the Scheme of Arrangement and the company's efforts to improve its financial position in the coming quarters.
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