February 1, 2025 | Mumbai
Gravity (India) Limited (BSE: 532015) has announced its unaudited financial results for the quarter ended December 31, 2024. The company reported a net profit of ₹33.29 lakh, marking an improvement from a net loss of ₹138.20 lakh in the previous quarter and ₹195.20 lakh in the same quarter last year.
Key Financial Highlights (₹ in Lakhs)
| Particulars | Q3 FY25 | Q2 FY25 | Q3 FY24 | 9M FY25 | 9M FY24 | FY24 (Audited) |
|---|---|---|---|---|---|---|
| Revenue from Operations | 0.16 | 10.48 | 43.06 | 122.12 | 204.07 | 225.45 |
| Other Income | 75.00 | 0.08 | 0.48 | 77.92 | 1.58 | 2.14 |
| Total Income | 75.16 | 10.55 | 43.54 | 200.04 | 205.65 | 227.60 |
| Total Expenses | 41.86 | 148.75 | 238.74 | 370.93 | 498.94 | 1,043.92 |
| Net Profit / (Loss) | 33.29 | (138.20) | (195.20) | (170.89) | (243.28) | (616.34) |
| Earnings Per Share (EPS) | 0.37 | (1.53) | (2.17) | (1.90) | (2.70) | (6.85) |
Segment Performance & Key Observations
- Inventory Markdowns: Gravity (India) Limited marked down non-moving/slow-moving inventory by ₹103.56 lakh during the nine-month period.
- Trade Receivables: The company has initiated the process of assigning doubtful trade receivables worth ₹548.23 lakh and has received post-dated cheques amounting to ₹75 lakh as part of the commitment. The management is still negotiating the final settlement.
Auditor’s Review and Concerns
The independent auditor, A.R. Sodha & Co., flagged the following issues:- Reversal of Expected Credit Losses: The company reversed an expected credit loss of ₹75 lakh, which the auditor states is not in line with Ind AS 109 (Financial Instruments). This artificially increased profits for the quarter.
- Inventory Valuation: The company has not provided adequate audit evidence for non-moving inventory worth ₹64.72 lakh.
- Gratuity Provisioning: The company has not accounted for its defined benefit obligation (gratuity) under Ind AS 19, making it difficult to assess its full financial impact.
- Going Concern Uncertainty: The company has incurred losses for two consecutive years, and its current liabilities exceed current assets by ₹89.45 lakh. This raises significant doubt about its ability to continue operations unless corrective measures yield results.
Strategic Outlook & Challenges
- Liquidity Constraints: The company’s cash flow remains under pressure due to significant losses, low revenue, and high liabilities.
- Business Revival Measures: Management is working on reviving business operations, but success remains uncertain.
- Risk Mitigation: The company must address auditor concerns regarding inventory valuation, trade receivables, and employee benefit provisions to improve investor confidence.
Conclusion
Gravity (India) Limited’s Q3 FY25 results show an improvement in profitability, but operational challenges and financial constraints persist. The company's ability to sustain itself will depend on the successful implementation of its business revival strategy.Stock Market Impact: Investors will closely watch how the company addresses liquidity issues and auditor concerns in the coming quarters.