Key Financial Figures

Quarterly Performance (Q2 FY27):

  • Revenue from operations: ₹453.10 crore
  • Total income: ₹453.29 crore
  • Profit before tax: ₹284.04 crore
  • Net profit: ₹204.28 crore
  • EPS: ₹6.12 (basic and diluted)

Half-Yearly Performance (H1 FY27):

  • Revenue from operations: ₹847.53 crore
  • Total income: ₹848.14 crore
  • Profit before tax: ₹412.04 crore
  • Net profit: ₹293.83 crore
  • EPS: ₹8.81 (basic and diluted)

Segment-wise Revenue (Q2 FY27):

  • Textile Engineering: ₹78.31 crore
  • Non-Woven: ₹299.92 crore
  • PSF: ₹110.69 crore
  • Inter-segment revenue: ₹35.83 crore

Balance Sheet Position (as at September 30, 2026):

  • Total assets: ₹899.76 crore
  • Equity share capital: ₹33.36 crore
  • Other equity: ₹140.19 crore
  • Current liabilities: ₹708.54 crore (including short-term borrowings of ₹300.81 crore)
  • Current assets: ₹573.21 crore
  • Negative working capital: ₹135.33 crore

Auditor's Qualified Opinion

Statutory auditors M/s K M Swadia and Company issued qualified review report citing:

Basis for Qualified Conclusion:

1. NCD Default: Company defaulted in redemption of 7% Unlisted, Secured, Unrated, Redeemable, Non-Convertible Debentures:

  • Old Series-III: ₹64.72 lakhs due October 7, 2025
  • New Series-IV: ₹146.79 lakhs due December 20, 2025
  • Total default: ₹211.51 lakhs plus interest
  • Received Notice of Event of Default from Debenture Trustee (Axis Trustee Services) dated November 11, 2025
  • Interest paid up to June 30, 2026

2. MSME Interest Liability: Unable to validate interest liability of ₹115.33 lakhs provided for MSME vendors under MSMED Act due to inadequate audit evidence

3. GST Compliance: Company not quantified impact of non-reversal of input tax credit for suppliers unpaid beyond 180 days as required under CGST Act

Material Uncertainty Related to Going Concern:

  • Negative working capital of ₹135.33 crore
  • Current liabilities exceed current assets
  • Ability to continue dependent on renewal of credit facilities, additional fundraising, and support from lenders/debenture holders

Emphasis of Matter:

Auditors highlighted several significant issues:

1. Legal Dispute with PHIL Shareholders: Notice received May 14, 2022 challenging validity of slump-sale transfer of Non-Woven and PSF business from Pacific Harish Industries Limited. Matter pending before Bombay High Court and NCLT with status quo orders.

2. Bombay High Court Order: Interim relief granted to Mrs. Renu Umesh Sanjanvalla restraining Sandeep Gandhi and Nikhil Gandhi families from dealing with family assets, including equity shares in Harish Textile Engineers Limited.

3. Bank of India Facilities: Term loan secured by corporate guarantee and mortgage of Kasha Textile Private Limited properties, challenged by shareholder alleging lack of proper consent under Section 186 of Companies Act.

4. Managerial Remuneration: Provision of ₹194.40 lakhs recognized for periods October 2025-September 2026 (₹152.56 lakhs net of TDS payable as of September 30, 2026), but payment withheld due to NCD default.

5. Lease Agreement Expiry: Lease with Harish Enterprise Private Limited expired June 30, 2026, not renewed. Company received vacation notice but continues occupation. Security deposit of ₹275 lakhs refundable on vacation.

6. Union Bank Facilities: Working capital facilities of ₹600 lakhs, outstanding ₹606.69 lakhs. Email confirmation of short renewal until March 19, 2027, but no formal sanction letter received.

7. Statutory Dues Default: Company not regular in depositing Income Tax/TDS/Professional Taxes/Gratuity/ESIC and GST due to liquidity crunch.

Other Contingent Liabilities

1. GST Liability: Unquantified liability for delayed payments to suppliers

2. MSME Disputes: Multiple claims from vendors:

  • ₹97.59 lakhs claim (₹25.50 lakhs principal + ₹72.09 lakhs interest) before Micro Small Enterprise Facilitation Council, Ahmedabad
  • ₹3.10 lakhs claim with interest from another supplier
  • ₹12.26 lakhs claim (₹8.35 lakhs principal after partial payment + ₹2.78 lakhs interest) in mediation

3. Tax Matters:

  • Income tax reassessment notice for AY 2021-22
  • GST notice claiming excess ITC of ₹9.09 lakhs with total demand of ₹16.39 lakhs
  • GST refund rejection notice for ₹23.03 lakhs for period January-March 2026

4. NCLT Matter: Settlement reached with Kamlesh Corporation for ₹130 lakhs against principal of ₹108.43 lakhs, additional ₹21.57 lakhs provided in Q2 FY27.

5. Mediation Matter: ₹114.76 lakhs claim from Vashi Integrated Solutions Ltd., mediation scheduled November 17, 2026.

Capital Structure Impact

Preferential Issue: Board approved on February 10, 2026:

  • Originally: 21.24 lakh shares at ₹64 per share aggregating ₹1,359.23 lakhs
  • Revised: 10.61 lakh shares at ₹64 per share aggregating ₹678.91 lakhs
  • For non-cash consideration only
  • Pending approvals from BSE Limited and SEBI

Operational Highlights

Segment Performance:

  • Textile Engineering segment reported loss of ₹116.99 lakhs in Q2 FY27
  • Non-Woven segment profit: ₹310.57 lakhs in Q2 FY27
  • PSF segment profit: ₹99.52 lakhs in Q2 FY27

Labour Code Implementation: Government notified four Labour Codes on November 21, 2025, company monitoring finalization of rules for financial impact assessment.

Cash Flow Implications

  • Net cash from operating activities: ₹220.56 lakhs for H1 FY27
  • Net cash used in investing activities: ₹80.85 lakhs for H1 FY27
  • Net cash used in financing activities: ₹176.97 lakhs for H1 FY27
  • Net decrease in cash: ₹37.26 lakhs for H1 FY27