Key Decisions and Approvals

The Board considered and approved the Unaudited Financial Results (Standalone and Consolidated) of the Company for the quarter ended June 30, 2026, together with the Limited Review Reports issued by the Statutory Auditors, C N K & Associates LLP.

Audit Qualification Details

The Statutory Auditors issued a Qualified Opinion on both Standalone and Consolidated Financial Results for the quarter ended June 30, 2026. The qualification relates to:

  • Sale of 11% [document also mentions 1% in some sections] Non-Cumulative Redeemable Preference Shares held in wholly owned subsidiary SARLAFLEX INC. (USA)
  • Necessary regulatory approvals for the sale, write-off of loss, and receipt of balance sale consideration remain awaited
  • As of June 30, 2026, an amount of ₹111.59 lakhs (₹1,11,59,132.60) representing consideration recoverable is carried under Trade Receivables/Other Receivables
  • The company has applied for necessary regulatory approvals and is pursuing the matter with the Authorized Dealer

Financial Results Highlights

Standalone Results (₹ in lakhs, except EPS):

  • Revenue from Operations: ₹10,404.04 (Q1 FY27) vs ₹10,165.29 (Q1 FY26)
  • Other Income: ₹2,784.21 (Q1 FY27) vs ₹2,348.53 (Q1 FY26)
  • Total Income: ₹13,188.25 (Q1 FY27) vs ₹12,513.82 (Q1 FY26)
  • Profit before Exceptional Items and Tax: ₹4,054.86 (Q1 FY27) vs ₹2,505.99 (Q1 FY26)
  • Exceptional Items: None in Q1 FY27 vs ₹5,433.16 loss in Q4 FY26
  • Profit before Tax: ₹4,054.86 (Q1 FY27) vs ₹2,505.99 (Q1 FY26)
  • Tax Expenses: ₹873.49 (Q1 FY27) vs ₹239.67 (Q1 FY26)
  • Profit after Tax: ₹3,181.38 (Q1 FY27) vs ₹2,266.32 (Q1 FY26)
  • Total Comprehensive Income: ₹3,959.16 (Q1 FY27) vs ₹1,631.12 (Q1 FY26)
  • Basic and Diluted EPS: ₹4.00 (Q1 FY27) vs ₹2.71 (Q1 FY26)
  • Paid-up Equity Share Capital: ₹795.03 lakhs (post-buyback) vs ₹835.03 lakhs (previous)

Consolidated Results (₹ in lakhs, except EPS):

  • Revenue from Operations: ₹11,326.43 (Q1 FY27) vs ₹10,239.38 (Q1 FY26)
  • Other Income: ₹2,785.97 (Q1 FY27) vs ₹2,268.25 (Q1 FY26)
  • Total Income: ₹14,112.40 (Q1 FY27) vs ₹12,507.63 (Q1 FY26)
  • Profit before Exceptional Items and Tax: ₹4,629.75 (Q1 FY27) vs ₹2,473.43 (Q1 FY26)
  • Exceptional Items: None in Q1 FY27 vs ₹7,713.26 loss in Q4 FY26
  • Profit before Tax: ₹4,629.75 (Q1 FY27) vs ₹2,473.43 (Q1 FY26)
  • Tax Expenses: ₹901.51 (Q1 FY27) vs ₹239.67 (Q1 FY26)
  • Profit after Tax: ₹3,728.24 (Q1 FY27) vs ₹2,233.76 (Q1 FY26)
  • Total Comprehensive Income: ₹4,483.32 (Q1 FY27) vs ₹1,605.07 (Q1 FY26)
  • Basic and Diluted EPS: ₹4.72 (Q1 FY27) vs ₹2.68 (Q1 FY26)

Subsidiary Transaction Details

During the quarter ended March 31, 2026 (previous quarter), the Company sold 11% [document also mentions 1% in auditor's report] Non-Cumulative Redeemable Preference Shares in Sarla Flex Inc. with face value of USD 10,00,000 each for consideration of USD 11,000 per share.

  • Standalone impact: Loss of ₹5,433.16 lakhs (net of reversal of impairment provision of ₹2,280.10 lakhs)
  • Consolidated impact: Loss of ₹7,713.26 lakhs (impairment provisions eliminated in consolidation)
  • Sale consideration recoverable: ₹111.59 lakhs as of June 30, 2026

Capital Structure Change

During Q1 FY27, the Company completed buyback of 40,00,000 (Forty Lakh) equity shares at ₹110 per share, reducing paid-up equity share capital from ₹835.03 lakhs to ₹795.03 lakhs.

Segment Information

The company operates in two business segments:

1. Yarn

2. Wind Power

Q1 FY27 Standalone Segment Results:

  • Yarn Net Sales: ₹5,122.20 lakhs
  • Wind Power Net Sales: ₹75.44 lakhs
  • Total Segment Assets: ₹81,359.57 lakhs
  • Total Segment Liabilities: ₹31,617.63 lakhs

Emphasis of Matters by Auditors

1. Sarlaflex Inc. (subsidiary) prepares financials on 'Going Concern' basis despite suspension of manufacturing operations since December 2017 and negative net worth

2. Investments in three Joint Ventures by Sarla Overseas Holdings Limited are not consolidated due to non-resolution of disputes or non-receipt of financial information

3. The unaudited interim financial results of two subsidiaries with total assets of ₹48,955.53 lakhs and total revenues of ₹12,462.04 lakhs were not reviewed by any auditor