Kallam Textiles Limited reported a net loss of ₹8,682.88 lakh for FY26, marking an 83% increase from the ₹4,736.96 lakh loss recorded in the previous year. The textile manufacturer’s revenue from operations declined to ₹24,135.06 lakh in FY26 from ₹25,670.85 lakh in FY25.

The company is currently undergoing Corporate Insolvency Resolution Process (CIRP) following a National Company Law Tribunal (NCLT) order dated April 6, 2026. Consequently, the powers of the Board of Directors have been suspended, and the financial results were signed by the Resolution Professional, Mr. Chillale Rajesh. The statutory auditors, Brahmayya & Co., issued a disclaimer of opinion, citing insufficient audit evidence regarding deferred tax assets, asset impairment, and creditor claims.

Financial Performance Overview

The company’s operational challenges were compounded by rising finance costs and reduced yield in finished goods production. The segment-wise breakdown reveals significant losses in core spinning and weaving units, while solar power operations remained profitable.

Auditor Disclaimer and Key Risks

The auditors highlighted six critical areas preventing a true and fair view of the financial statements:

• Deferred Tax Asset (DTA): A DTA of ₹5,124.54 lakh was recognized on carried-forward losses. Auditors could not verify the probability of future taxable profits given the ongoing insolvency proceedings.
• MAT Credit: MAT credit of ₹1,968.75 lakh was recognized, but its recoverability is uncertain under new tax regime provisions effective April 1, 2026.
• Impairment Assessment: No impairment assessment was performed on Property, Plant and Equipment carrying a value of ₹33,059 lakh, despite indicators such as recurring losses and adverse market conditions.
• Creditor Claims Discrepancy: Financial creditors Union Bank of India and Indian Bank claimed amounts totaling ₹42,832.97 lakh, which exceeds the book value of borrowings by ₹4,276.33 lakh. No reconciliation was provided.
• Leave Encashment: Provisions for employee leave encashment under new labour codes were not recognized or quantified.
• Yield Reduction: A material reduction in finished goods yield was noted without satisfactory explanation from management, affecting inventory valuation and cost of production.

Going Concern Uncertainty

The auditors drew attention to material uncertainties casting significant doubt on the company’s ability to continue as a going concern. Although the NCLAT stayed further CIRP proceedings on June 18, 2026, to allow for a restructuring proposal, the outcome remains undetermined. The company’s accumulated losses, erosion of net worth, and classification of loans as Non-Performing Assets (NPA) underscore the severity of its financial distress.

What the Numbers Show

A divergence between the recognized Deferred Tax Asset (₹5,124.54 lakh) and the current-year net loss (₹8,682.88 lakh) highlights a fundamental accounting contradiction. Recognizing a DTA assumes future profitability, yet the company incurred losses exceeding half the DTA’s value in FY26 alone while facing active insolvency proceedings. This suggests the asset may be overstated if the restructuring fails to restore profitability.

Kallam Textiles Ltd has closed its trading window for designated persons starting October 1, 2026. The closure will remain in effect until 48 hours after the declaration of financial results for the quarter ended September 30, 2026.

This action is taken in compliance with the company's Code of Conduct to Regulate, Monitor and Report Trading by Insiders. It also adheres to the provisions of the SEBI (Prohibition of Insider Trading) Regulations.

Compliance and Restrictions

All designated persons, including directors of the company, have been intimated not to enter into any transaction involving the company's securities during this period. The trading window closure is a standard regulatory requirement to prevent insider trading while unpublished price-sensitive information is in circulation.

The company secretary and compliance officer, Golagani Ramesh Kumar, signed the communication dated September 30, 2026, notifying the BSE Limited about the closure.