Company Overview
Shanthi Gears Limited, a leading industrial gearbox manufacturer, submitted its Annual Report for FY 2025-26 pursuant to SEBI Listing Regulations, disclosing comprehensive financial and operational performance.
Financial Performance (₹ Crores)
The company reported a 14% decline in revenue from operations to ₹518.72 crore (FY25: ₹604.62 crore) and net profit of ₹76.66 crore (FY25: ₹96.03 crore). Key profitability metrics showed EBITDA margin of 22.89% (FY25: 23.72%) and PAT margin of 14.78% (FY25: 15.88%). The company maintained zero debt status with net worth of ₹440.06 crore and strong current ratio of 3.71.
Exceptional Item - Labour Code Impact
A significant exceptional item of ₹4.78 crore was recognized for the statutory impact of India's new labour code implementation, which consolidated 29 existing labour laws. This primarily affected defined benefit obligations, with gratuity obligation increasing to ₹18.20 crore (FY25: ₹11.21 crore) and plan amendments costing ₹4.57 crore due to changes in wage definition.
Operational Highlights
The company recorded its highest-ever capital investment in plant and machinery, with capital work-in-progress at ₹25.79 crore (FY25: ₹4.90 crore). Order inflows gained significant momentum during the second half, with record bookings in Q4 FY26. Geographic revenue breakdown showed India contributing ₹449.11 crore and international markets ₹69.61 crore.
Dividend and Corporate Actions
The Board declared a total dividend of ₹5 per share (500%) comprising ₹3 interim and ₹2 proposed final dividend, exceeding the company's 25% payout policy. Total dividend amount was ₹38.36 crore, with ₹27.03 crore paid to holding company Tube Investments of India Limited.
Employee Benefits and Costs
Total employee benefit expense decreased to ₹78.68 crore (FY25: ₹81.69 crore), with salaries and wages at ₹68.29 crore. The company had 479 permanent employees as of 31st March 2026. Actuarial assumptions for gratuity included discount rate of 7.44% and salary escalation rate of 9.00%.
Corporate Governance and Compliance
The company maintained strong governance practices with 5 Board meetings and various committee meetings. CSR spending of ₹2.19 crore (2% of average net profit) focused on environmental and rural development projects. All related party transactions were conducted at arm's length basis.
Outlook and Positioning
Shanthi Gears is well-positioned to capitalize on manufacturing transformation opportunities driven by infrastructure investments, energy transition, and industrial automation. Key growth sectors include railways, steel, extrusion, cranes, material handling, and cement industries.
Regulatory and Auditor Details
The financial statements were prepared in accordance with Ind AS and approved by the Board on 5 May 2026. Statutory auditors MSKA & Associates LLP were appointed for 5 years, with total auditor fees of ₹18.65 lakhs. The company complied with all applicable Secretarial Standards and maintained adequate internal financial controls.