OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with our Restated Consolidated Financial Information which have been included in this Red Herring Prospectus. The following discussion and analysis of our financial condition and results of operations is based on our Restated Consolidated Financial Information for the Fiscals 2026, 2025 and 2024 including the related notes and reports, included in this Red Herring Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI (ICDR) Regulations 2018, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our special purpose audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Consolidated Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the reader’s level of familiarity with Ind AS, Companies Act, SEBI Regulations and other relevant accounting practices in India.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under “Forward Looking Statements” and “Risk Factors” on pages 27 and 28 respectively, and elsewhere in this Red Herring Prospectus.
Our Fiscal ends on March 31 of each year. Accordingly, all references to a particular Fiscal are to the 12 months ended March 31 of that year.
Business Overview
We are an integrated fabric manufacturing and processing company engaged in the production of value added products. Leveraging advanced technology, well established production capabilities and stringent quality systems, we convert raw textiles into finished, high-quality fabrics. Our model enables us to offer a diversified product portfolio, maintain consistent quality, support innovation in fabric development and provide our customers with reliable, cost-efficient and timely solutions, thereby positioning us as a preferred partner for brands seeking consistency, innovation and faster delivery timelines. We specialize in the manufacturing of 100% cotton fabric, cotton lycra (stretch) fabric, cotton blends, polyester blends, and in the processing of fabric including 100% cotton, cotton blends, polyester-viscose (P/V) and polyester fabric.
Our manufacturing process commences with (i) the procurement of greige fabric from third-party suppliers; or (ii) the procurement of yarn, which is subsequently converted into greige fabric through outsourced job-work arrangements undertaken in accordance with our technical specifications. Upon receipt of the greige fabric, all subsequent processing operations, including bleaching, dyeing and finishing, are carried out in-house at our Manufacturing Facility. Through these processes, we convert greige fabric into finished fabric of the requisite quality, specifications and end-use requirements.
Key Performance Indicators
In evaluating our business, we consider and use certain key performance indicators that are presented below as supplemental measures to review and assess our operating performance. The presentation of these key performance indicators is not intended to be considered in isolation or as a substitute for the Restated Consolidated Financial Information included in this Red Herring Prospectus. We present these key performance indicators because they are used by our management to evaluate our operating performance. Further, these key performance indicators may differ from the similar information used by other companies, including peer companies, and hence their comparability may be limited. Therefore, these matrices should not be considered in isolation or construed as an alternative to AS measures of performance or as an indicator of our operating performance, liquidity, profitability or results of operation. A list of our KPIs for the Fiscals 2026, 2025 and 2024 is set out below:
(Rs. in million, unless stated otherwise) |
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| Key Performance Indicators (KPIs) | Unit | Fiscal 2026 | Fiscal 2025 | Fiscal 2024 |
FINANCIAL KPIs |
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| Revenue from Operations1Rs. | Rs. in million | 5,169.49 | 3,159.52 | 1,209.79 |
| EBITDA(2) | Rs. in million | 847.74 | 581.19 | 284.87 |
| EBITDA Margin(3) | in % | 16.40% | 18.39% | 23.55% |
| Net Profit after tax (4) | Rs. in million | 340.23 | 185.63 | 130.95 |
| Net Profit Margin(5) | in % | 6.58% | 5.88% | 10.82% |
| Return on Net Worth(6) | in % | 39.05% | 34.08% | 40.46% |
| Return on Capital Employed(7) | in % | 19.69% | 16.97% | 16.18% |
| Debt-Equity Ratio(8) | in times | 2.48 | 2.96 | 3.72 |
| Debt Service Coverage Ratio (9) | in times | 1.70 | 1.58 | 1.81 |
OPERATIONAL KPIs |
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| Sale of ServicesRs. | in % | 17.30% | 30.12% | 88.72% |
| Sale of Goods11) | in % | 82.70% | 69.88% | 11.28% |
| Days Working Capital(12) | in days | 134 | 122 | 104 |
| Inventory Days(13) | in days | 150 | 115 | 127 |
| Debtors Days(14) | in days | 61 | 48 | 44 |
| Creditors Days(15) | in days | 79 | 57 | 54 |
As certified by Statutory Auditors of our Company, pursuant to their certificate dated September 07, 2026.
Notes:
(1) Revenue from operations means the Revenue from Operations as appearing in the Restated Consolidated Financial Information.
(2) EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit/ (loss) before exceptional items and tax for the fiscal and adding back finance costs and depreciation and amortization expenses.
(3) EBITDA margin is calculated as EBITDA as a percentage of revenue from operations.
(4) Net Profit after tax represents the restated profits of our Company after deducting all expenses.
(5) Net Profit margin is calculated as restated net profit after tax for the fiscal divided by revenue from operations.
(6) Return on Net Worth is calculated as Net Profit after tax as restated for the end of the period/fiscal divided by Average Net worth as at the end of the fiscal. Average net worth means the average of the net worth of current and previous fiscal. Net worth means the aggregate value of the paid-up share capital and other equity.
(7) Return on capital employed) is calculated as Earnings before interest and taxes divided by average capital employed (average capital employed is calculated as average of the total equity, total borrowings and deferred tax liabilities (net of deferred tax assets) of the current and previous fiscal.
(8) Debt-equity ratio is calculated by dividing total debt by total equity. Total debt represents long term and short-term borrowings. Total equity includes the aggregate value of the paid-up share capital and other equity.
(9) Debt Service Coverage Ratio is calculated as the sum of (i) earnings available for debt-service, i.e., the profit after tax, (ii) depreciation, (iii) interest divided by sum of (i) interest and (ii) principal repayment during the year. Sale of Services is calculated as revenue from sale of services as appearing in the Restated Consolidated Financial Information, divided by the total revenue from operations.
(10) Sale of Goods is calculated as revenue from sale of goods as appearing in the Restated Consolidated Financial Information, divided by the total revenue from operations.
(11) Days Working Capital is arrived at by dividing working capital (current assets excluding cash and cash equivalents and bank balances less current liabilities excluding short term borrowings) by revenue from operations multiplied by the number of days in the fiscal (365).
(12) Inventory Days =Number of days during the fiscal (365)/ (Cost of Goods Sold/average Inventory at the beginning and end of the Fiscal).
(13) Debtor Days = Number of days during the fiscal (365)/ (Revenue from Operations/average Trade Receivables at the beginning and end of the Fiscal).
(14) Creditor Days = Number of days during the fiscal (365)/ (Net Purchases /average Trade Payables at the beginning and end of the Fiscal).
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL PERIOD
In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business activities or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months, except as disclosed below:
Subsequent to the balance sheet date, there have been transfers of shares by the promoters. As a result, the final shareholding of the promoters as on the date of signing of this restated consolidated financial statement is as follows:
| Name of the Promoter | No of Shares | Shareholding (%) |
| Deepank Bhandari | 17,642,335 | 41.48% |
| Sona Polyspin Private Limited | 11,765,000 | 27.66% |
| Harshil Nuwal | 7,259,627 | 17.07% |
| Uma Nuwal | 13 | 0.00% |
| Subhash Chandra Nuwal | - | - |
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Our business is subjected to various risks and uncertainties, including those discussed in the section titled “Risk Factors” on page 28. Our results of operations and financial conditions are affected by numerous factors including the following: 1
1 Our Manufacturing Facility and Registered Office are located in Rajasthan, and a significant portion of our revenue amounting to Rs.1,928.80 million, Rs.1,594.57 million and Rs.1,153.06 million constituting 37.31%, 50.47% and 95.31% of our total revenue from operations for Fiscal 2026, Fiscal 2025 and Fiscal 2024 respectively is also derived from this state. Further, our procurement from Rajasthan amounted to Rs.3,448.05 million, Rs.2,587.97 million and Rs.505.83 million constituting 96.01%, 98.36% and 96.26% of purchases for the Fiscal 2026, Fiscal 2025 and Fiscal 2024. As a result, we are exposed to geographic concentration risks that may adversely affect our operations, financial condition, and results of operations.
2 Our Company currently carries out its business operations from a single manufacturing facility located at Bhilwara, Rajasthan. Any slowdown or shutdown of our manufacturing operations at our Manufacturing Facility could have an adverse effect on our business, financial condition and results of operations.
3 We have experienced negative cash flows in the past, and sustained or significant negative cash flows may adversely affect our business, financial condition and growth prospects
4 There are outstanding litigations involving our Company, Promoters, Directors and SMP. An adverse outcome in any of these proceedings may affect our reputation and standing and impact our future business and could have a material adverse effect on our business, financial condition, cash flows and results of operations.
5 Our Promoters has provided personal property and guarantees as collateral for borrowings availed by the Company.
6 We enter into certain related party transactions in the ordinary course of our business and we cannot assure you that such transactions will not adversely affect our business, results of operations, profitability and margins, cash flows and financial condition.
7 In the past our individual Promoter Deepank Bhandari was subject to disqualification and default for the period commencing from November 01, 2017, till December 1, 2019. He was also associated with entities that have been struck off, which may pose compliance risk and could subject us to adverse regulatory perceptions.
8 Our debt-equity ratio as at Fiscals 2026, 2025 and 2024 was 2.48, 2.96 and 3.72 times, respectively. Our high debt-equity ratio may adversely affect our financial condition and results of operations.
9 There have been instances of irregularities, discrepancies in filings with the Registrar of Companies and other non-compliances under the Companies Act in the past, which may result in penalties and adverse consequences.
10 Our Company’s Promoters and Directors and some of our Group Companies are at present involved and may enter into ventures that may lead to real or potential conflicts of interest with our business.
BASIS OF PREPARATION, MEASUREMENT AND MATERIAL ACCOUNTING POLICIES
A. Corporate Overview
Sonaselection India Limited, incorporated on 11th February, 2022, is a Company domiciled in India and limited by shares (CIN: U17299RJ2022PLC079631). The address of the Company’s Registered Office and Plant location situated at 18th K.M. Stone, Chittorgarh Road, Hamirgarh, Bhilwara, Rajasthan, India, 311025. The company is engaged in manufacturing and processing of all type of textile fabrics.
B. Basis of Preparation of Restated Consolidated Financial Information
The Restated Consolidated Financial Information comprises of:
Restated Statement of Assets and Liabilities of the Company as on March 31, 2026, 31st March, 2025 and 31st March, 2024, the Restated Statement of Profit and Loss (including Other Comprehensive Income/Loss), Restated Statement of Changes in Equity and the Restated Statement of Cash Flows for the year ended March 31, 2026, March 31, 2025, and March 31, 2024, and the summary of material accounting policies and explanatory notes (collectively ‘the Restated Consolidated Financial Information);
These Restated Consolidated Financial Information have been prepared by the management as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (“ICDR Regulations”) issued by the Securities and Exchange Board of India (“SEBI”), in pursuance of the Securities and Exchange Board of India Act, 1992, for the purpose of inclusion in the Red Herring Prospectus (“RHP”) in connection with the proposed initial public offering of equity shares of face value of Rs.10/- each of the Company (“Issue”), in terms of the requirements of:
1. Section 26 of Part I of Chapter III of the Companies Act, 2013 (“Act”);
2. ICDR Regulations;
3. The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI) (“Guidance Note”).
The Restated Consolidated Financial Information have been extracted by the Management from:
a) The Audited Ind AS Financial Statements of the Company as at and for the year ended March 31, 2026, prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on August 01, 2026.
b) As at and for the years ended March 31, 2025, and March 31, 2024:
From the Audited Special Purpose Ind AS Financial Statements of the Company as at and for the years ended March 31, 2025, and March 31, 2024, which were prepared by the Company in response to the requirements of the SEBI e-mail and were approved by the Board of Directors at their Board meeting held on November 27, 2025. The Audited Special Purpose Ind AS Financial Statements as at and for the years ended 31st March 2025 and 31st March 2024 have been prepared after making suitable adjustments to the accounting heads from their Indian GAAP values following accounting policies (both mandatory exceptions and optional exemptions) availed as per Ind AS 101.
We have audited the Special Purpose Ind AS Financial Statements of the Company for the years ended March 31, 2025, and March 31, 2024, in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013, read with the ICAI’s Guidance Note on Reports in Company Prospectuses and other accounting principles generally accepted in India. These financial statements have been audited solely for the limited purpose of complying with the requirements that (a) the financial statements be audited by an audit firm holding a valid peer review certificate issued by the Peer Review Board of the ICAI, as mandated by the SEBI (ICDR) Regulations in connection with the proposed IPO, and (b) the financial statements be in compliance with the requirements of the aforementioned SEBI e-mail, which was communicated to us by the Book Running Lead Manager appointed for the IPO.
C. Basis of Measurement/Use of Estimates and judgements
(i) The Financial Statements are prepared on going concern basis under the historical cost convention and on accrual method of accounting, except for certain financial assets and liabilities, including derivative financial instruments which have been measured at fair value as described below and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind AS.
(ii) The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
(iii) The preparation of Financial Statements requires judgments, estimates and assumptions that affect the reported amount of Assets and Liabilities, disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amount of Revenues and Expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.
D. Functional and Presentation Currency
These Financial Statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded to the nearest million (up to two decimals), except as stated otherwise
E. Current and Non-Current classification
The Company presents Assets and Liabilities in the Balance Sheet based on Current/Non-Current classification.
An Asset is Current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the reporting period; or
• Cash or Cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
A liability is current when:
• It is expected to be settled in normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer settlement of the liability for at least twelve months after the
reporting period.
Current assets/ liabilities include the current portion of non-current assets/ liabilities respectively. All other assets/ liabilities are classified as non-current. Deferred Tax Assets/Liabilities are classified as Non-Current.
F. Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company considers its operating cycle to be within one year.
G. Material Accounting Policies
A summary of the material Accounting Policies applied in the preparation of the Financial Statements are as given below. These Accounting Policies have been applied consistently to all periods presented in the Financial Statements.
1. Property, Plant & Equipment
Definition
Property, plant and equipment are tangible items that:
(A) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(B) are expected to be used during more than one period.
Initial Recognition and Measurement
An item of Property, Plant and Equipment is recognised as an Asset if and only if it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.
Items of Property, Plant and Equipment are measured at Cost less Accumulated Depreciation and Accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset, inclusive of non-refundable taxes & duties, to the location and condition necessary for it to be capable of operating in the manner intended by management.
When parts of an item of property, plant and equipment have different useful lives, they are recognised separately.
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of Property, Plant and Equipment are capitalised.
Subsequent Costs
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
The cost of replacing part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in Statement of Profit or Loss as and when incurred.
Derecognition
Property, Plant and Equipment are derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and Losses on disposal of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and Equipment, and are recognised in the Statement of Profit and Loss.
Depreciation
Assets are depreciated using straight line method over the estimated useful life of the asset as specified in Part “C” of Schedule II of Companies Act, 2013 after retaining residual life of 5% of original cost. Assets residual values and useful lives are reviewed at each financial year end considering the physical condition of the assets.
Depreciation on additions to/deductions from Property, Plant & Equipment during the year is charged on pro-rata basis from/up to the date on which the asset is available for use/disposed.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along- with its unamortised depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalised costs relating to the property are written off in the same period.
2. Capital Work-in-Progress
The cost of self-constructed assets includes the cost of materials & direct labour, and any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management and borrowing costs.
Expenses directly attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis on the cost of related assets.
3. Intangible Assets and Intangible Assets under Development
Initial recognition and measurement
An Intangible Asset is recognised if and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the company and the cost of the asset can be measured reliably.
Intangible assets that are acquired by the Company, which have finite useful lives, are recognised at cost. Subsequent measurement is done at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Expenditure on development activities is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
Expenditure incurred which are eligible for capitalizations under intangible assets are carried as intangible assets under development till they are ready for their intended use.
Subsequent Costs
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
Derecognition
An Intangible Asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and Losses on disposal of an item of Intangible Assets are determined by comparing the proceeds from disposal with the carrying amount of Intangible Assets and are recognised in the Statement of Profit and Loss.
Amortization
Intangible Assets having definite life is amortised on straight line method in their useful lives. Useful life of Computer Software is estimated at five years.
4. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction, exploration, development or erection of qualifying assets are capitalised as part of cost of such asset until such time the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of:
(a) interest expense calculated using the effective interest method as described in Ind AS 109 - ‘Financial Instruments’,
(b) finance charges in respect of finance leases recognised in accordance with Ind AS 116 - ‘Leases’
(c) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs and,
(d) other costs that an entity incurs in connection with the borrowing of funds. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are charged to revenue as and when incurred.
5. Inventories
Finished Goods are valued at the lower of cost and net realisable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials, components, stores and spares and work-in progress are valued at cost. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Inventories being stock-in-trade are valued at the lower of cost and net realisable value. Inventories being stock-in-trade are valued at the lower of cost and net realisable value. Spare parts other than those capitalised as Property, Plant and Equipment are carried as inventory.
The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for.
6. Cash and Cash Equivalent
Cash and cash equivalent in the Balance Sheet comprises Cash at Banks, Cash on Hand and ShortTerm Deposits with an original maturity of three month or less, which are subject to insignificant risk of change in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash at banks, cash in hand, and short-term deposits, as defined above.
7. Government Grants
Government grants are recognised where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. When the government grant relates to an asset, the asset is disclosed by deducting that grant in arriving at the carrying amount of that asset. Government grants that compensate the Company for expenses incurred are recognised in the statement of profit and loss, as income or deduction from the relevant expense, on a systematic basis in the periods in which the expense is recognised.
8. Provisions, Contingent Liabilities and Contingent Assets
Provisions
provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent Liabilities
Contingent Liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a Contingent Liability, unless the probability of outflow of economic benefits is remote. Contingent Liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent Assets
Contingent Assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent Assets are disclosed in the financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the financial statements.
9. Foreign Currency Transactions and Translation
Transactions in foreign currencies are initially recorded at the functional currency rates at the date the transaction first qualifies for recognition. Monetary Assets and Liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss in the year in which it arises.
10. Revenue Recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration the company is entitled in exchange for those goods or services.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (Net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of discounts, rebates, credits, price incentives or similar terms.
A. Sale of goods
Generally, control is transferred upon shipment of goods to the customer or when the goods is made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the goods shipped. Consideration is generally due upon satisfaction of performance obligations and a receivable is recognised when it becomes unconditional.
In case of discounts, rebates, credits, price incentives or similar terms, consideration are determined based on its most likely amount, which is assessed at each reporting period.
B. Rendering of services
Revenue from rendering of services is recognised over time by measuring the progress towards complete satisfaction of performance obligations at the reporting period.
Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government). Consideration is generally due upon satisfaction of performance obligations and a receivable is recognised when it becomes unconditional.
In case of discounts, rebates, credits, price incentives or similar terms, consideration are determined based on its most likely amount, which is assessed at each reporting period.
C. Other operational revenue
Other operational revenue represents income earned from the activities incidental to the business and is recognised when the right to receive the income is established as per the terms of the contract.
11. Other Income
Interest income is accrued on a time basis by reference to the principal outstanding and the effective interest rate.
Dividend income is accounted in the period in which the right to receive the same is established.
Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably
12. Employee Benefits
i. DEFINED BENEFIT OBLIGATIONS
(a) Post-employment benefits (Gratuity):
The liability recognised in balance sheet in respect of gratuity (unfunded) is the present value of defined benefit obligation at the end of reporting period less fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using projected unit credit method.
Remeasurement actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement if changes in equity and in the balance sheet.
(b) Other employee benefits:
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as present value of expected future payments to be made in respect of services provided by employees up to the end of reporting period using the projected unit credit method.
ii. DEFINED CONTRIBUTION PLAN:
Company pays contributions to provident fund, employee pension scheme and employee state insurance as per statutes/ amounts as advised by the Authorities. The Company has no further obligations once the contributions have been paid. The contributions are accounted for as defined contribution plan and the contributions are recognised as employee benefit expense when they are due.
iii. SHORT-TERM BENEFITS:
Liabilities for salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of reporting period in which the employees rendered the related services are recognised in respect of employee’s service up to the end of reporting period and are measured at the amount expected to be paid when the liabilities are settled. These liabilities are presented as current employee benefit obligations in the balance sheet.
13. Income Taxes
Income Tax Expense comprises Current and Deferred Tax. Current Tax Expense is recognised in Statement of Profit and Loss A/c except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which it is recognised in OCI or Equity.
CURRENT TAX
Current Tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Current Income Taxes are recognised under ‘Income Tax payable’ net of payments on account, or under ‘Tax receivables’ where there is a debit balance.
DEFERRED TAX
Deferred Tax is recognised using the Balance Sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred Tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred Tax Assets and Liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle Current Tax Liabilities and Assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred Tax is recognised in Statement of Profit and Loss except to the extent that it relates to items recognised directly in OCI or Equity, in which case it is recognised in OCI or Equity.
A Deferred Tax Asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
14. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity
Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus or minus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.
Subsequent measurement
Subsequent measurement of financial assets is described below
Financial Assets (Debt instruments) at amortised cost
A debt instrument is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Debt instrument at FVTOCI
A ‘debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:
- The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
- The asset’s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI).
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorised as at amortised cost or as FVTOCI, is classified as at FVTPL.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company’s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘passthrough’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of Financial Assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the financial assets and credit risk exposure.
For recognition of impairment loss on financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, the credit quality of the instrument improves then the entity reverts to recognising impairment loss allowance based on 12- month ECL.
In respect of Trade receivables or any financial asset that result from transactions that are within the scope of Ind AS 115, company follows ‘simplified approach’ for recognition of impairment loss allowance within the scope of Ind AS 115, if they do not contain a significant financing component. It recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Financial Liabilities
Initial recognition and measurement
All Financial Liabilities are recognised at fair value and in case of loans, net of directly attributable transaction cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
Subsequent Measurement
Financial Liabilities are carried at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any discount or premium on acquisition and any material transaction that are any integral part of the EIR. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate the fair value of the instrument.
Derecognition
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Derivative Financial Instrument
The Company uses forwards to mitigate the risk of changes in interest rates, exchange rates and commodity prices. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are also subsequently measured at fair value on the reporting date. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken to cash flow hedge reserve through Statement of Other Comprehensive Income.
These are accounted for as follows:
a) Cash flow hedge
When derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in the cash flow hedging reserve being part of other comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the Statement of Profit and Loss. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss previously recognised in the cash flow hedging reserve is transferred to the Statement of Profit and Loss upon the occurrence of the underlying transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified in the Statement of Profit and Loss.
b) Fair Value Hedge
Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to Statement of Profit and Loss over the period of maturity.
15. CSR Expenditure
The Company undertakes Corporate Social Responsibility (CSR) activities as per Section 135 of the Companies Act, 2013 and the Companies (CSR Policy) Rules, 2014. CSR expenditure includes amounts incurred on activities that are approved as ongoing projects by the Board in line with the CSR policy and applicable law.
CSR expenditure is recognised in the Statement of Profit and Loss in the period in which it is incurred. For ongoing projects, any unspent amount at the end of the financial year is transferred to a separate “Unspent CSR Account” with a scheduled bank within 30 days from the end of the financial year, in accordance with Section 135(6) of the Act. Such amounts are spent within the timelines prescribed under Rule 4(6) of the CSR Rules.
The Company does not capitalize any CSR expenditure unless it results in the creation of an asset controlled by a qualifying entity as specified under Rule 7(4) of the CSR Rules.
16. Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components, and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (‘CODM’).
The Company’s Board has identified the CODM who is responsible for financial decision making and assessing performance. The Company has a single operating segment as the operating results of the Company are reviewed on an overall basis by the CODM.
17. Lease
The Company, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset. The determination of whether an agreement is, or contains, a lease is based on the substance of the agreement at the date of inception.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset.
Initial Measurement
Lease Liability: At the commencement date, a Company measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments shall be discounted using incremental borrowing rate. Right-of-use assets: initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives.
Subsequent Measurement
Lease Liability: Company measure the lease liability by (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and
(c) remeasuring the carrying amount to reflect any reassessment or lease modifications. Right-of-use assets: subsequently measured at cost less accumulated depreciation and impairment losses. Right-of- use assets are depreciated from the commencement date on a straight line basis over the shorter of the lease term and useful life of the under lying asset.
Impairment
Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
Short Term Lease Or Low Value Lease
Short term lease is that, at the commencement date, has a lease term of 12 months or less. A lease that contains a purchase option is not a short-term lease.
Low value lease is for which the underlying asset is of low value. If the company elected to apply short term lease/Low Value Lease, the lessee shall recognise the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis. The lessee shall apply another systematic basis if that basis is more representative of the pattern of the lessee’s benefit.
18. Earnings per share
Basic earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares
19. Prior Period Items
Errors of material amounts relating to prior period(s) are disclosed by a note with nature of prior period errors, amount of correction of each such prior period presented retrospectively in the statement of profit and loss and balance sheet, to the extent practicable along with change in basic and diluted earnings per share. However, where retrospective restatement is not practicable for a particular period then the circumstances that lead to the existence of that condition and the description of how and from where the error is corrected are disclosed in Notes on Accounts.
20. Dividend Distribution
Dividend Distribution / Annual dividend distribution to the shareholders is recognised as a liability in the period in which the dividends are approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors. Dividend payable and corresponding tax on dividend distribution is recognised directly in equity.
21. Events after reporting period
Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognised in the financial statements. Non-adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represent material change and commitment affecting the financial position are disclosed in the reports of the board of directors.
PRINCIPAL COMPONENTS OF STATEMENT OF PROFIT AND LOSS
Set forth below are the principal components of statement of profit and loss from our continuing operations:
Total Income
Our total income comprises of (i) revenue from operations and (ii) other income.
Revenue from Operations
Revenue from operations comprises of: (i) Sale of Services and (ii) Sale of Products
Other Income
Other income includes (i) Interest Income on Fixed deposit with Bank; (ii) Interest Income on Security deposit with AVVNL; (iii) Store spares & chemical Sale; and (iv) Other income.
Expenses
Our expenses comprise of: (i) cost of material consumed; (ii) purchase of stock-in-trade; (iii) changes in inventories of finished goods, work in progress and stock-in-trade (iv) employee benefits expenses;
(v) finance costs; (vi) depreciation and amortised expenses; and (vii) other expenses.
Cost of Material Consumed
Cost of Material Consumed denote the sum of inventory at the beginning of fiscal, purchases of raw materials, less inventory at the end of the fiscal.
Purchase of Stock-in-Trade
Purchase of Stock-in-Trade denote the purchases made during the fiscal.
Changes in inventories of finished goods, work in progress and stock-in-trade
Changes in inventories of finished goods, work in progress and stock-in-trade denote the difference between inventory at the beginning of the fiscal and inventory at the end of the fiscal.
Employee Benefits Expense
Employee benefits expenses include (i) salaries and wages (including bonus); (ii) leave encashment and gratuity; (iii) contributions to provident and other funds, and (v) staff welfare expenses.
Finance Costs
Finance cost includes (i) interest on term loans; (ii) interest on working capital loans; (iii) interest on vehicle loans; (iv) interest on unsecured loan; (v) interest on others, (vi) interest subsidy, and (vii) Bank processing charges.
Depreciation and Amortization expenses
Depreciation and amortization expenses include (i) Depreciation on tangible assets, and (ii) amortization of intangible assets.
Other Expenses
Other expenses includes:
(A) Operating and Manufacturing Overheads which further includes (i) Consumption of stores and spare parts; (ii) Consumption of packing material; (iii) Power Expenses; (iv) Effluent Treatment & Water Expenses; (v) Repairs and maintenance - Buildings; (vi) Repairs and maintenance - Machinery; (vii) Job Processing charges & Job Weaving & Sizing Charges;
(B) Establishment Expenses which further includes (viii) Bank Charges; (ix) Advertisement Expenses; (x) Membership & Subscription Fees; (xi) Festival & Pooja Expenses; (xii) Share Issued Expenses; (xiii) Repair - Others; (xiv) Donation Expenses; (xv) Director Remuneration;
(xvi) Insurance Charges; (xvii) Legal & Professional Expenses; (xviii) Office Expenses; (xix) Payment to Auditors; (xx) Printing & Stationary Expenses; (xxi) Rent Expenses; (xxii) Rate & Taxes Expenses; (xxiii) Telephone & Internet charges; (xxiv) Sundry Balance Written off; (xxv) Independent Director Sitting fees; (xxvi) Postage & Courier Expenses; (xxvii) CSR expenses; (xxviii) Sampling & testing Expenses; (xxix) Vehicle Running Expenses;(xxx) Loss on Sale of Fixed Assets(xxxi) Travelling & conveyance Expenses
(C) Selling and Distribution Expenses which further includes (xxxii) Freight and forwarding (xxxiii)
Cash discount and (xxxiv) Agency commission.
Our Results of Operations
The following table sets forth selective financial data from our restated statement of profit & loss for the fiscals 2026, 2025 and 2024, the components of which are also expressed as a percentage of revenue from operations for such fiscals:
(Z in million, unless stated otherwise) |
||||||
| Fiscal 2026 | Fiscal 2025 | Fiscal 2024 | ||||
| Particulars | Amount | As a % of revenue from operations | Amount | As a % of revenue from operations | Amount | As a % of revenue from operations |
Income: |
||||||
| Revenue from Operations | 5,169.49 | 100% | 3,159.52 | 100.00% | 1,209.79 | 100.00% |
| Other Income | 6.47 | 0.13% | 5.14 | 0.16% | 3.31 | 0.27% |
Total Income |
5,175.96 | 100.13% | 3,164.66 | 100.16% | 1,213.10 | 100.27% |
Expenses: |
||||||
| Cost of Material Consumed | 3,060.95 | 59.21% | 2,177.82 | 68.93% | 529.43 | 43.76% |
| Purchase of Stock-in-Trade | 78.97 | 1.53% | 14.60 | 0.46% | 5.36 | 0.44% |
| Changes in Inventories in Finished Goods, Work-in-Progress and Stock- in-Trade | (81.93) | (1.58)% | (345.46) | (10.93)% | (52.03) | (4.30)% |
| Employee Benefits Expense | 483.70 | 9.36% | 356.30 | 11.28% | 203.45 | 16.82% |
| Finance Costs | 176.89 | 3.42% | 147.25 | 4.66% | 47.45 | 3.92% |
| Depreciation and Amortization Expenses | 190.33 | 3.68% | 173.14 | 5.48% | 67.97 | 5.62% |
| Other Expenses | 786.53 | 15.21% | 380.21 | 12.03% | 242.02 | 20.01% |
Total Expenses |
4,695.44 | 90.83% | 2,903.86 | 91.91% | 1,043.65 | 86.27% |
Profit before tax |
480.52 | 9.30% | 260.80 | 8.25% | 169.45 | 14.01% |
Less: Tax Expense |
||||||
| Current Tax | 91.38 | 1.77% | 45.74 | 1.45% | 29.90 | 2.47% |
| Less : MAT Credit Entitlement | 26.28 | 0.51% | (24.85) | (0.79)% | (1.43) | (0.12)% |
| Deferred Tax | 22.63 | 0.44% | 54.28 | 1.72% | 10.03 | 0.83% |
Total Tax Expense |
140.29 | 2.71% | 75.17 | 2.38% | 38.50 | 3.18% |
Profit / (Loss) from the period |
340.23 | 6.58% | 185.63 | 5.88% | 130.95 | 10.82% |
RESULTS OF OPERATIONS INFORMATION FOR THE FISCAL 2026 COMPARED WITH FISCAL 2025
(Z in million, unless stated otherwise) |
||||
| Particulars | Fiscal 2026 | Fiscal 2025 | Change in Rs. Million | Change in % |
Income: |
||||
| Revenue from Operations | 5,169.49 | 3,159.52 | 2,009.97 | 63.62% |
| Other Income | 6.47 | 5.14 | 1.33 | 25.88% |
Total Income |
5,175.96 | 3,164.66 | 2,011.30 | 63.56% |
Expenses |
||||
| Cost of Materials Consumed | 3,060.95 | 2,177.82 | 883.13 | 40.55% |
| Purchases of Stock-in-Trade | 78.97 | 14.60 | 64.37 | 440.89% |
| Changes in Inventories of Finished Goods, Work-in-Progress and Stock- in-Trade | (81.93) | (345.46) | 263.53 | (76.28)% |
| Employee Benefits Expense | 483.70 | 356.30 | 127.40 | 35.76% |
| Finance Costs | 176.89 | 147.25 | 29.64 | 20.13% |
| Depreciation and Amortization Expenses | 190.33 | 173.14 | 17.19 | 9.93% |
| Other Expenses | 786.53 | 380.21 | 406.32 | 106.87% |
Total Expenses |
4,695.44 | 2,903.86 | 1,791.58 | 61.70% |
Profit Before Tax |
480.52 | 260.80 | 219.72 | 84.25% |
Less: Tax Expense |
||||
| Current Tax | 91.38 | 45.74 | 45.64 | 99.78% |
| Less : MAT Credit (Entitlement) / utilised | 26.28 | (24.85) | 51.13 | (205.75)% |
| Deferred Tax | 22.63 | 54.28 | (31.65) | (58.31)% |
Total Tax Expense |
140.29 | 75.17 | 65.12 | 86.63% |
Profit for the Year |
340.23 | 185.63 | 154.60 | 83.28% |
Total Income
Our total income has increased by 63.56% from Rs.3,164.66 million in fiscal 2025 to Rs.5,175.96 million in fiscal 2026 due to increase in revenue from operations and other income by 63.62% and 25.88% respectively.
Revenue from Operations
Our revenue from operations has increased by 63.62% from Rs.3,159.52million in fiscal 2025 to Rs.5,169.49 million in fiscal 2026. The increase is reflected by increase in sale of products by Rs.2,067.21 million which is partially set off by a decrease in sale of services by Rs.57.24 million. The changes can be attributed to the following reasons:
• The increase in revenue was primarily driven by the full-year operations of our cotton processing plant, which commenced operations in July 2024, and the stabilization of our marketing division. During Fiscal 2026, we benefited from an established customer base, improved market penetration, and the addition of new customers, all of which collectively contributed to the significant growth in our revenue from operations.
• The increase in revenue was further supported by additional revenue (garmenting) of Rs. 62.14 million generated through our wholly on subsidiary, Sionnah Enterprises Private Limited.
Other Income
Our other income increased by 25.88%, from Rs.5.14 million in Fiscal 2025 to Rs.6.47 million in Fiscal 2026. This increase was primarily attributable to a Rs.3.08 million increase in interest income on security deposits with AVVNL, partially offset by a Rs.0.93 million decrease in interest income on fixed deposits with banks and a Rs.1.06 million decrease in income from the sale of stores, spares and chemicals
Total Expenses
Our total expenses increased by 61.70% from Rs.2,903.86 million in Fiscal 2025 to Rs.4,695.44 million in Fiscal 2026. The increase was primarily on account of increase in; (i) cost of material consumed by Rs.883.13 million; (ii) purchase of stock-in-trade by Rs.64.37 million; (iii) changes in inventories of finished goods, work-in-progress and stock-in-trade by Rs.263.53 million; (iv) employee benefit expenses by Rs.127.40 million; (v) finance costs by Rs.29.64 million; (vi) depreciation and amortization expense by Rs.17.19 million; and (vii) other expenses by Rs.406.32 million.
Cost of Material Consumed
Cost of materials consumed increased by 40.55% from Rs.2,177.82 million in Fiscal 2025 to Rs.3,060.95 million in Fiscal 2026. Such increase was primarily attributable to an increase in the consumption of (i) yarn by Rs.1,210.18 million, (ii) dyes and chemicals by Rs.107.36 million, and (iii) coal and fuel by Rs.76.69 million, partially offset by a decrease in the consumption of greige fabric by Rs.511.10 million. The increase in yarn consumption was primarily attributable to the Companys strategic shift from procuring greige fabric from third parties to procuring yarn and getting greige fabric manufactured through third- party weavers, resulting in higher value addition. Consequently, although the absolute cost of materials consumed increased, the cost of materials consumed as a percentage of revenue decreased from 68.93% in Fiscal 2025 to 59.21% in Fiscal 2026, reflecting improved operating efficiencies and a higher growth in revenue relative to material costs
Purchase of Stock-in-Trade
Purchases of stock-in-trade increased by 440.89% from Rs.14.60 million in Fiscal 2025 to Rs.78.97 million in Fiscal 2026, due to increase in overall operations during Fiscal 2026.
Changes in Inventories of Finished Goods, Work in Progress and Stock-in-Trade
Changes in inventories of finished goods, work-in-progress and stock-in-trade improved from Rs.(345.46) million in Fiscal 2025 to Rs.(81.93) million in Fiscal 2026, on account of lower accumulation of inventories in Fiscal 2026.
Employee Benefit Expenses
Employee benefit expenses increased by 35.76% from Rs.356.30 million in Fiscal 2025 to Rs.483.70 million in Fiscal 2026, on account of deployment of additional workforce which led to increase in average headcount from 737 in Fiscal 2025 to 876 in Fiscal 2026. Such change can further be attributed to increase in (i) salaries and wages (including bonus) by Rs.107.19 million; (ii) Leave encashment and Gratuity by Rs.3.37 million; (iii) Contributions to Provident and other funds by Rs.2.29 million; and (iv) Staff welfare expenses by Rs.14.55 million.
Finance Cost
Finance costs increased by 20.13% from Rs.147.25 million in Fiscal 2025 to Rs.176.89 million in Fiscal 2026, on account of increase in (i) interest on working capital loans by Rs.72.86 million; and; (ii) interest on vehicle loans by Rs.0.70 million; which was partially offset decrease by (iii) interest on unsecured loans by Rs. 5.53 million (iv) interest on term loans by Rs. 15.06 million (v) interest on others by Rs.0.06 million and (vi) interest subsidy under RIPS policy received in Fiscal 2026 amounting to Rs. 23.04 million.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased by 9.93% from Rs.173.14 million in Fiscal 2025 to Rs.190.33 million in Fiscal 2026, on account of increase in depreciation on tangible assets by Rs.15.55 million and depreciation on Intangible assets by Rs.1.64 million.
Other Expenses
Other expenses increased by 106.87% from Rs.380.21 million in Fiscal 2025 to Rs.786.53 million in Fiscal 2026. This was primarily due to the following reasons:
• Operating and manufacturing overheads increase by Rs.342.40 million during the fiscal 2026. Such increase was majorly due to increase in (i) job processing charges & job weaving & sizing charges by Rs.324.92 million; (ii) consumption of stores and spare parts by Rs. 8.55 million; (iii) Effluent Treatment & Water Expenses by Rs. 8.21 million; and which was partially offset decrease by (iv) power expenses by Rs. 9.89 million and which is in line with increase in revenue
• Establishment expenses increased by Rs. 13.92 million during the fiscal 2026, majorly on account of increase in: (i) insurance charges by Rs. 4.49 million; (ii) legal and professional fees by Rs. 4.37 million; (iii) director remuneration by Rs. 2.22 million; (iv) postage & courier expenses by Rs. 2.32 million; and (v) CSR expenses by Rs. 1.78 million The increase was partially setoff by decrease in (vi) printing & stationary expenses by Rs.1.95 million: (vii) share issued expenses by Rs.1.75 million; and (viii) membership & subscription fees by Rs.1.67 million
• Selling and distribution expenses increased by Rs.50.00 million during the fiscal 2026, on account of increase in: (i) cash discount by Rs. 39.86 million; and (ii) agency commission by Rs. 10.78 million.
Profit Before Tax
Profit before tax has increased by 84.25% from Rs.260.80 million in Fiscal 2025 to Rs.480.52 million in Fiscal 2026 as a result of overall increase in operations in Fiscal 2026.
Tax Expenses
Tax expenses increased by 86.63% from Rs.75.17 million in Fiscal 2025 to Rs.140.29 million in Fiscal 2026, Such increase was majorly due to increase in current tax expense Rs.45.74 million in Fiscal 2025 Rs.91.38 million in Fiscal 2026.
Profit After Tax
During Fiscal 2026, the revenue from operations of the Company increased significantly by 63.62%. Further, total expenses as a percentage of revenue from operations decreased from 91.91% in Fiscal 2025 to 90.83% in Fiscal 2026. This improvement was primarily attributable to the stabilization of the Companys manufacturing operations, improved operating efficiencies, better absorption of fixed costs due to higher production and sales volumes, and the full-year contribution of the cotton processing plant. Accordingly, the PAT margin improved from 5.88% in Fiscal 2025 to 6.58% in Fiscal 2026. Further, the PAT increased in absolute terms by 83.28%, from Rs.185.63 million in Fiscal 2025 to Rs.340.23 million in Fiscal 2026, reflecting improved operating leverage, enhanced manufacturing efficiencies and continued growth in the scale of operations.
RESULTS OF OPERATIONS INFORMATION FOR THE FISCAL 2025 COMPARED WITH FISCAL 2024
(Rs. in million, unless stated otherwise)
Income: |
| Revenue from Operations 3,159.52 1,209.79 1,949.73 161.16% |
| Other Income 5H 331 HI 55.29% |
Total Income 3,164.66 1,213.10 1,951.56 160.87% |
Expenses |
| Cost of Materials Consumed 2,177.82 529.43 1,648.39 311.35% |
| Purchases of Stock-in-Trade 14.60 5.36 9.24 172.39% |
| Changes in Inventories of |
| Finished Goods, Work-in- (345.46) (52.03) (293.43) (564.02)% |
| Progress and Stock-in-Trade |
| Employee Benefits Expense 356.30 203.45 152.85 75.13% |
| Particulars | Fiscal 2025 | Fiscal 2024 | Change in Rs. Million | Change in % |
| Finance Costs | 147.25 | 47.45 | 99.80 | 210.33% |
| Depreciation and Amortization Expenses | 173.14 | 67.97 | 105.17 | 154.73% |
| Other Expenses | 380.21 | 242.02 | 138.19 | 57.10% |
Total Expenses |
2,903.86 | 1,043.65 | 1,860.21 | 178.24% |
Profit Before Tax |
260.80 | 169.45 | 91.35 | 53.91% |
Less: Tax Expense |
||||
| Current Tax | 45.74 | 29.90 | 15.84 | 52.98% |
| Less : MAT Credit (Entitlement) / utilised | (24.85) | (1.43) | (23.42) | (1637.76)% |
| Deferred Tax | 54.28 | 10.03 | 44.25 | 441.18% |
Total Tax Expense |
75.17 | 38.50 | 36.67 | 95.25% |
Profit for the Year |
185.63 | 130.95 | 54.68 | 41.76% |
Total Income
Our total income has increased by 160.87% from Rs.1,213.10 million in fiscal 2024 to Rs.3,164.66 million in fiscal 2025 due to increase in revenue from operations and other income by 161.16% and 55.29% respectively.
Revenue from Operations
Our revenue from operations has increased by 161.16% from Rs.1,209.79 million in fiscal 2024 to Rs.3,159.52 million in fiscal 2025. The increase is reflected by increase in sale of products by Rs.2,071.37 million which is partly set off by a decrease in sale of services by H21.64 million. The changes can be attributed to the following reasons:
• Bangladesh has long been a formidable player in the global textile market, primarily due to its competitive labour costs and preferential trade agreements. However, recent political unrest and economic challenges have disrupted its garment sector, creating a significant opportunity for India to capitalize on the shifting dynamics. (Source: CareEdge Report). Leveraging these emerging prospects, the company expanded its manufacturing capabilities in fabric processing by commissioning an additional 2.37 million meters per month of capacity in July 2024.
• As a result, the revenue from fabric sales increased from H36.50 million in Fiscal 2024 to Rs.2,207.87 million in Fiscal 2025 indicating an increase of Rs.2,071.37 million.
• Moreover, the company earned revenue from 13 states during the Fiscal 2025 as compared to 7 states during Fiscal 2024 which is reflected by an increase in selling and distribution expenses from Rs.21.41 million in Fiscal 2024 to Rs.54.53 million in Fiscal 2025, driven by enhanced sales and distribution activities
Other Income
Our other income was Rs.5.14 million in Fiscal 2025 as compared to Rs.3.31 million in Fiscal 2024, indicating an increase of 55.29%. Such increase is primarily on account of increase in (i) interest income on fixed deposit with bank by Rs.1.50 million, (ii) interest income on security deposit with AVVNL by Rs. 0.27 million, and (iii) store spares & chemical sale by Rs. 0.07 million; during Fiscal 2025.
Total Expenses
Our total expenses have increased by 178.24% from Rs.1,043.65 million in Fiscal 2024 to Rs. 2,903.86 million in Fiscal 2025. This increase was primarily on account of increase in; (i) cost of material consumed by Rs.1,648.39 million; (ii) purchase of stock-in-trade by Rs. 9.24 million; (iii) employee benefit expenses of Rs. 152.85 million; (iv) finance costs by Rs. 99.80 million; (v) depreciation and amortization expense by Rs. 105.17 million; and (vi) other expenses by Rs. 138.19 million. The increase was partially offset by a decrease in changes in inventories of finished goods, work in progress and stock-in-trade by Rs.293.43 million.
Cost of Material Consumed
Cost of material consumed increased by 311.35% from Rs.529.43 million in Fiscal 2024 to Rs.2,177.82 million in Fiscal 2025. Such increase can be attributed to increase in consumption of; (i) dyes and chemicals by Rs.81.00 million; (ii) yarn by Rs. 116.55 million; (iii) greige fabric by Rs. 1,408.83 million; and (iv) coal and fuel by Rs. 42.01 million. There was an increase in consumption of griege fabric as the company has shifted to towards in-house processing of greige fabric instead of job work. Consequently, the cost of material consumed as a percentage of revenue increased from 43.76% in Fiscal 2024 to 68.93% in Fiscal 2025.
Purchase of Stock-in-Trade
Purchase of stock-in-trade increased by 172.39%, from Rs.5.36 million in Fiscal 2024 to Rs.14.60 million in Fiscal 2025, due to increase in overall operations during Fiscal 2025.
Changes in Inventories of Finished Goods, Work in Progress and Stock-in-Trade
Change in inventories of finished goods, work in progress and stock-in-trade decreased from Rs.(52.03) million in Fiscal 2024 to Rs.(345.46) million in Fiscal 2025, on account of higher accumulation of inventories in Fiscal 2025.
Employee Benefit Expenses
Employee Benefit Expenses increased by 75.13% from Rs.203.45 million in Fiscal 2024 to Rs.356.30 million in Fiscal 2025 on account of deployment of additional workforce which led to increase in average headcount from 486 in Fiscal 2024 to 737 in Fiscal 2025. Such change can further be attributed to increase in (i) salaries and wages (including bonus) by Rs.143.54 million; (ii) Leave encashment and Gratuity by Rs.2.42 million; (iii) Contributions to Provident and other funds by Rs.0.85 million; and (iv) Staff welfare expenses by Rs.6.04 million.
Finance Cost
Finance cost increased by 210.33% from Rs. 47.45 million in Fiscal 2024 to Rs. 147.25 million in Fiscal 2025, on account of increase in (i) interest on term loans by Rs. 75.21 million; (ii) interest on working capital loans by Rs. 21.89 million; (iii) interest on vehicle loans by Rs. 0.33 million; (iii) interest on unsecured loans by Rs. 7.55 million which was partially offset by (i) decrease interest on others by Rs.3.14 million; (ii) interest subsidy under RIPS policy received in Fiscal 2025 amounting to Rs. 3.14 million; and (iii) decrease in bank processing charges by Rs.1.02 million.
Depreciation and Amortization Expenses
Depreciation and amortization expenses increased by 154.73% from Rs.67.97 million in Fiscal 2024 to Rs. 173.14 million in Fiscal 2025, on account of increase in depreciation on tangible assets by Rs.105.17 million. Such increase is majorly on account of additions in tangible Assets during fiscal 2025 amounting to Rs.1,122.60 million as compared to increase of Rs.327.22 million during Fiscal 2024.
Other Expenses
Other expenses increased by 57.10% from Rs.242.02 million in Fiscal 2024 to Rs. 380.21 million in Fiscal 2025. This was primarily due to the following reasons:
• Operating and manufacturing overheads increase by Rs.95.74 million during the fiscal 2025. Such increase was majorly due to increase in (i) job processing charges & job weaving & sizing charges by Rs.66.33 million; (ii) consumption of stores and spare parts by Rs. 10.45 million; (iii) consumption of packing materials by Rs. 9.85 million; and (iv) power expenses by Rs. 7.14 million.
• Establishment expenses increased by Rs.9.33 million during the fiscal 2025, majorly on account of increase in: (i) travelling & conveyance expenses by Rs. 2.82 million; (ii) legal and professional fees by Rs. 1.86 million; (iii) share issue expenses by Rs. 1.78 million; (iv) membership & subscription fees by Rs. 1.68 million; and (v) printing & stationary expenses by Rs. 1.35 million. The increase was partially setoff by decrease in rate & taxes expenses by Rs.3.45 million.
• Selling and distribution expenses increased by Rs.33.12 million during the fiscal 2025, on account of increase in: (i) freight and forwarding charges by Rs. 13.24 million; (ii) cash discount by Rs. 14.19 million; and (iii) agency commission by Rs. 5.69 million.
Profit Before Tax
Profit before tax has increased by 53.91% from Rs.169.45 million in Fiscal 2024 to Rs.260.80 million in Fiscal 2025 as a result of overall increase in operations in Fiscal 2025.
Tax Expenses
Due to increase in our profit before tax, our current tax expense increased by 52.98% from Rs.29.90 million in Fiscal 2024 to Rs. 45.74 million in Fiscal 2025 which was partially offset by MAT Credit Entitlement which decreased from Rs.(1.43) million in Fiscal 2024 to Rs.(24.85) million in Fiscal 2025. Moreover, on account of additions in property plant and equipment to increase the fabric processing capacity of the company, deferred tax expense increased by 441.18% from Rs.10.03 million in Fiscal 2024 to Rs.54.28 million in Fiscal 2025.
Profit After Tax
During Fiscal 2025, the revenue from operations of the Company increased significantly by 161.16%. However, total expenses as a percentage of revenue from operations increased from 86.27% in Fiscal 2024 to 91.91% in Fiscal 2025. This increase was primarily attributable to the strategic transition of the Company from a job-work-based model to a manufacturing-based model, which entailed higher operating leverage, increased fixed costs and incremental expenses associated with scaling up manufacturing operations. Accordingly, the PAT margin declined from 10.82% in Fiscal 2024 to 5.88% in Fiscal 2025. However, the PAT increased in absolute terms by 41.76%, from H30.95 million in Fiscal 2024 to H85.63 million in Fiscal 2025, reflecting improved scale and volume-led growth.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed the expansion of our business and operations primarily through debt financing and funds generated from our operations. From time to time, we have obtained loan facilities to finance our working capital requirements. We evaluate our funding requirements regularly in light of cash flows from our operating activities, the requirements of our business and operations and market conditions.
Cash Flow
The table below summaries our cash flows from our Restated Consolidated Financial Information for the fiscals 2026, 2025 and 2024:
(Z in million, unless stated otherwise) |
|||
| Particulars | Fiscal | ||
| 2026 | 2025 | 2024 | |
| Net cash flow generated from/ (utilised in) operating activities (A) | (109.89) | (141.77) | 176.08 |
| Net cash flow generated from/ (utilised in) investing activities (B) | (199.99) | (504.19) | (1,081.20) |
| Net cash flow generated from/ (utilised in) financing activities (C) | 331.54 | 606.71 | 946.50 |
| Net (decrease)/ increase in cash & cash equivalents (A+B+C) | 21.66 | (39.25) | 41.38 |
| Cash and cash equivalents at the beginning of the year | 2.15 | 41.40 | 0.02 |
| Cash and cash equivalents at the end of the year | 23.81 | 2.15 | 41.40 |
Cash flow from Operating Activities For the Fiscal ended March 31, 2026
Net cash flow generated from our operating activities was H09.89 million for the fiscal 2026. Our operating profit before working capital changes was Rs.855.68 million during the year ended March 31, 2026, which was the result of the profit before tax of Rs.480.52 million adjusted primarily for depreciation
and amortisation of Rs.190.33 million, employee retirement benefits of Rs. 10.31 million, finance costs of Rs.176.89 million and interest income of Rs. 2.37 million. Our movements in working capital primarily consisted of increase in inventories of Rs. 567.77 million, increase in trade receivables of Rs.340.12 million, increase in other current assets of Rs. 89.79 million, increase in trade payables of Rs. 70.00 million, increase in other financial liabilities of Rs.31.12 million, increase in other financial assets of Rs. 1.38 million and decrease in other current liabilities of Rs.1.15 million. Taxes paid amounted to Rs.66.28 million.
For the Fiscal ended March 31, 2025
Net cash flow utilised in our operating activities was Rs.141.77 million for the fiscal 2025. Our operating profit before working capital changes was Rs.584.83 million during the fiscal 2025, which was the result of the profit before tax for the fiscal of Rs. 260.80 million adjusted primarily for depreciation and amortisation of Rs. 173.14 million, employee retirement benefits of Rs. 6.94 million, finance costs of Rs. 147.25 million and interest income of Rs. 3.30 million. Our movements in working capital primarily consisted of decrease in other financial assets of Rs.2.55 million, increase in inventories of Rs. 780.07 million, increase in trade receivables of Rs. 557.00 million, increase in other current assets of Rs. 56.16 million, increase in trade payables of Rs. 664.29 million, increase in other financial liabilities of Rs.43.83 million and increase in other current liabilities of Rs.3.79 million. Taxes paid amounted to Rs.47.83 million.
For the Fiscal ended March 31, 2024
Net cash flow generated from our operating activities was Rs.176.08 million for the fiscal 2024. Our operating profit before working capital changes was Rs.287.59 million during the fiscal 2024, which was the result of the profit before tax for the fiscal of Rs.169.45 million adjusted primarily for depreciation and amortisation of Rs. 67.97 million, employee retirement benefits of Rs. 4.52 million, finance costs of Rs. 47.45 million, and interest income of Rs. 1.80 million. Our movements in working capital primarily consisted of increase in other financial assets of Rs.4.86 million, increase in inventories of Rs.44.53 million, decrease in trade receivables of Rs. 8.77 million, increase in other current assets of Rs.53.69 million, increase in trade payables of Rs. 2.01 million, increase in other financial liabilities of Rs. 15.20 million and increase in other current liabilities of Rs. 1.66 million. Taxes paid amounted to Rs.36.07 million.
Cash flow from Investing Activities
For the Fiscal ended March 31, 2026
Net cash flow utilised in investing activities was Rs.199.99 million during fiscal 2026. This is primarily attributable to capital expenditure on tangible fixed assets including capital work in progress of Rs.255.64 million and capital expenditure on intangible assets including intangible assets under development Rs.3.97 million. These payments were offset by Redemption in fixed deposits of Rs.27.25 million and Interest received of Rs.2.37 million.
For the Fiscal ended March 31, 2025
Net cash flow utilised in investing activities was Rs.504.19 million during fiscal 2025. This is primarily attributable to capital expenditure on tangible fixed assets including capital work in progress of Rs.492.44 million, capital expenditure on intangible assets including intangible assets under development Rs.6.41 million and investments in fixed deposits of Rs.8.64 million. These payments were offset by Interest received of Rs.3.30 million.
For the Fiscal ended March 31, 2024
Net cash flow utilised in investing activities was Rs.1,081.20 million for fiscal 2024. This is primarily attributable to capital expenditure on tangible fixed assets including capital work in progress of Rs.1,052.94 million and investments in fixed deposits of Rs.30.06 million. These payments were partially offset by interest received of Rs.1.80 million.
Cash flow from Financing Activities
For the Fiscal ended March 31, 2026
Net cash flow utilised in financing activities was Rs.331.54 million for the year ended March 31, 2026 consisting of proceeds from short-term borrowings of Rs.485.61 million, repayment from long-term borrowings of Rs.22.82 million, and finance cost paid Rs.( 176.89) million.
For the Fiscal ended March 31, 2025
Net cash flow generated from financing activities was Rs.606.71 million for fiscal 2025 consisting of proceeds from short-term borrowings of Rs.353.52 million, proceeds from long-term borrowings of Rs. 274.43 million, proceeds from issue of compulsorily convertible debentures of Rs. 71.01 million, proceeds from equity shares issued (including Security Premium) of Rs.55.00 million and Finance cost paid Rs.147.25 million.
For the Fiscal ended March 31, 2024
Net cash flow generated from financing activities was Rs.946.50 million for fiscal 2024 consisting of proceeds from short-term borrowings of Rs.910.35 million, proceeds from long-term borrowings of Rs. 83.60 million, and Finance cost paid Rs.47.45 million.
Financial Indebtedness
As on March 31, 2026 the total outstanding borrowings of our Company was Rs.2,582.40 million. The following table sets out the details of the total borrowings outstanding as on March 31, 2026.
| Particulars | As at March 31, 2026 |
Secured |
|
| (i) Term Loan (including current maturities) | 1,307.86 |
| (ii) Vehicle Loan (including current maturities) | 36.09 |
| (iii) Cash Credit facilities/ Working Capital Demand Loan | 1,078.55 |
Unsecured |
|
| (i) Unsecured loans from related parties and others | 109.31 |
| (ii) Unsecured loans from others | 50.59 |
Total Borrowings |
2,582.40 |
In the event, any of our lenders declare an event of default, such current and any future defaults could lead to acceleration of our repayment obligations, termination of one or more of our financing
agreements or force us to sell our assets, any of which could adversely affect our business, results of operations and financial condition.
Contingent Liabilities and Commitments
The following table sets forth our contingent liabilities as at March 31, 2026, March 31, 2025, and March 31, 2024 as per the Restated Consolidated Financial Information:
(Z in million) |
|||
| Particulars | As at March 31, 2026 | As at March 31, 2025 | As at March 31, 2024 |
Contingent Liability- |
|||
| Claims Against the company not acknowledged as debt | |||
Commitments- |
|||
| In respect of Procurement of capital goods under Zero duty Export Promotion Capital Goods Scheme of Foreign Trade Policy, 2023, the company has an export obligation, which is required to be fulfilled at different dates, on or before 24.06.2031. In the event of nonfulfillment of the export obligation, the company will be liable to pay custom duties and penalties, as applicable. | 200.05 | 191.86 | 183.63 |
Note: The Company has certain disputes, lawsuits and claims, which arise in from time to time in the ordinary course of business. The amount in some of the cases can not be ascertained and in some cases not material.
For details of our contingent liability and guarantees as at March 31, 2026, March 31, 2025 and March 31, 2024, as per Ind AS 37, see “Restated Consolidated Financial Information - Note 44 - Contingent Liability & Commitments" on page 438.
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.
CONTRACTUAL OBLIGATIONS AND MATURITIES
As on date of this Red Herring Prospectus, our Company does not have any contractual obligations and maturities.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include remuneration paid to KMPs, Professional fees, sitting fees to independent directors, Interest payment, repayment of loans, sales, purchases, factory unit purchased and rent expenses.
For details of our related party transactions, please see “Restated Consolidated Financial Information - Note 34 - Related Party Disclosures” on page 421.
Quantitative and Qualitative Disclosure about Market Risks
Our Company’s activities expose it to variety of financial risks: market risk, credit risk, interest rate risk and liquidity risk. The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations. Company’s senior management oversees the management of these risks. It is Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree policies for managing each of these risks, which are summarised below:
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market prices.
Foreign Currency Risk
The Company undertakes limited transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Companys exposure to currency risk relates primarily to the Companys operating activities when transactions are denominated in a different currency from the Companys functional currency. The Company has not taken derivative instruments to hedge the foreign currency risk. The Company continuously monitors the fluctuations in currency risk and ensures that the company does not have adverse impact on account of fluctuation in exchange rate.
Interest Rate Risk
Interest rate risk primarily arises from floating / fixed rate borrowing, including various short-term and long-term loan. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companys exposure to the risk of changes in market interest rates arises on borrowings with floating interest rate from banks.
Credit Risk
The Company is exposed to credit risk primarily from cash and cash equivalents, bank deposits, trade receivables, and other financial assets. Credit risk arises from the possibility that a counterparty may fail to meet its financial obligations, leading to a financial loss.
(i) Cash and Cash Equivalents and Bank Deposits: The Company minimizes credit risk associated with cash and cash equivalents and bank deposits by maintaining deposits with banks having high credit ratings, as assigned by domestic credit rating agencies. This reduces the risk of default by banks.
(ii) Trade Receivables: Credit risk on trade receivables is managed by regular monitoring of the outstanding amounts and performing a detailed assessment of recoverability. The Company has established policies for aging analysis, and where applicable, provisions for expected credit losses (ECL) are recognised.
Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they fall due, without incurring significant losses. The Company manages liquidity risk by maintaining adequate reserves, banking facilities, and by continuously monitoring forecast and actual cash flows.
(i) Cash Flow Management: The Company continuously monitors its cash flow requirements to ensure that it has sufficient liquidity to meet its operational and financial obligations, including trade payables, financial liabilities, and tax obligations. Regular cash flow forecasting is performed to assess the timing and amount of future cash inflows and outflows.
(ii) Access to Credit Facilities: The Company has access to various credit facilities from banks which provide flexibility to meet short-term and long-term liquidity needs.
(iii) Maturity Analysis of Financial Liabilities: The Company has established procedures to regularly monitor and assess the maturity profile of its financial liabilities, including trade payables, loans, and other financial obligations. The maturity analysis helps ensure that the Company has enough liquidity to meet these obligations in a timely manner.
(iv) Cash and Cash Equivalents: The Company maintains a sufficient level of cash and cash equivalents to manage day-to-day operational expenses and meet unforeseen liquidity requirements. This liquidity buffer is designed to prevent disruptions to business operations due to short-term liquidity shortages.
Off-Balance Sheet Items
We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entity that have been established for the purposes of facilitating off-balance sheet arrangements.
Effect of Inflation
We are affected by inflation as it has an impact on the material cost, wages, etc. in line with changing inflation rates; we rework our margins so as to absorb the inflationary impact.
Reservations, Qualifications and Adverse Remarks
Except as disclosed in chapter titled “Restated Consolidated Financial Information” on page 374, there have been no reservations, qualifications and adverse remarks.
Changes in Accounting Policies
There have been no changes in our accounting policies during the Fiscals 2026, 2025 and 2024.
Material Frauds
There are no material frauds, as reported by our statutory auditor, committed against our Company, during the Fiscals 2026, 2025 and 2024.
Unusual or Infrequent Events or Transactions
As on date, there have been no unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses.
Significant Economic Changes that Materially Affected or are Likely to Affect Income from Continuing Operations
Indian rules and regulations as well as the overall growth of the Indian economy have a significant bearing on our operations. Major changes in these factors can significantly impact income from continuing operations. There are no significant economic changes that materially affected our Company’s operations or are likely to affect income from continuing operations except as described in chapter titled “Risk Factors" on page 28.
Known Trends or Uncertainties that have had or are expected to have a Material Adverse Impact on Sales, Revenue or Income from Continuing Operations
Our business has been subject, and we expect it to continue to be impacted by the trends identified above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Significant Factors Affecting our Results of Operations and Financial Condition” and the uncertainties described in “Risk Factors” on pages 465 and 28, respectively. To our knowledge, except as discussed in this Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operation.
Seasonality of Business
There is no seasonality in our business.
Future Changes in Relationship between Costs and Revenues, in Case of Events Such as Future Increase in Labour or Material Costs or Prices that will Cause a Material Change are known
Other than as described in chapter titled “Risk Factors” on page 28 and in this section, to our knowledge there are no known factors that might affect the future relationship between cost and revenue.
Extent to which Material Increases in Net Sales or Revenue are due to Increased Sales Volume, Introduction of New Products or Services or Increased Sales Prices
Our business has been affected and we expect that it will continue to be affected by the trends identified above and the uncertainties described in the section “Risk Factors” on page 28. Changes in revenue in the last three Fiscals are as described in “Results of Operations Information for the Fiscal 2025 compared with Fiscal 2024” and “Results of Operations Information for the Fiscal 2024 compared with Fiscal 2023” mentioned above.
Total Turnover of Each Major Industry Segment in which the Issuer Operates
We operate in only one major segment.
Competitive Conditions
We expect competition in our industry from existing and potential competitors to intensify. For further details on competitive conditions that we face across our various business segments, please see “Risk Factors”, “Industry Overview” and “Our Business” on pages 28, 183 and 277 respectively.
Status of any Publicly Announced New Products or Business Segments
As on the date of the Red Herring Prospectus, there are no new products or business segments that have or are expected to have a material impact on our business prospects, results of operations or financial condition.
Significant Dependence on a Single or Few Customers
The percentage of revenue from operations derived from our top customers is given below:
(in Z million) |
||||||
| Fiscal 2026 | Fiscal 2025 | Fiscal 2024 | ||||
| Sr. No. Particulars | Amount | % of Revenue from Operatio n | Amount | % of Revenue from Operatio n | Amount | % of Revenue from Operatio n |
| 1 Revenue from Top 1 customer | 240.24 | 4.65% | 216.59 | 6.86% | 117.31 | 9.70% |
| 2 Revenue from Top 5 customers | 917.51 | 17.75% | 852.40 | 26.98% | 388.23 | 32.09% |
| 3 Revenue from Top 10 customers | 1522.42 | 29.44% | 1,199.85 | 37.98% | 582.51 | 48.15% |
IIFL Customer Care Number
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1860-267-3000 / 7039-050-000
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+91 9892691696
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