Khadim India Limited has recovered ₹31.96 crore from the Samagra Shiksha Abhiyan Authority (SSAA), Punjab, following a High Court order confirming a favourable arbitral award.

The payment resolves a prolonged dispute over withheld receivables and forfeited performance bank guarantees related to a tender for school shoes and uniforms.

Resolution Details

According to a disclosure filed with stock exchanges on August 26, 2026, Khadim India received the outstanding amount of ₹31,96,86,729 along with applicable interest and other dues.

The recovery follows an order by the Hon’ble High Court of Punjab and Haryana, Chandigarh, dated May 5, 2026. The court confirmed the Arbitral Award passed on June 27, 2022, which was in favour of the company.

Dispute Background

The conflict originated when the Tenderer, acting through the Director General School Education-cum-State Project Director (DG-School), withheld approximately ₹32 crore and forfeited performance bank guarantees worth ₹1.5 crore and ₹35 lakh in August 2020.

Khadim India initiated arbitration proceedings against these actions. The Arbitral Panel ruled in June 2022 that the company was entitled to the principal amount plus interest at 9% per annum. It also ordered the refund of the forfeited guarantees with interest at 4.5% per annum and proportionate arbitration costs.

The dispute saw a setback in August 2023 when the District Court at Mohali set aside the arbitral award. Khadim India appealed this decision to the High Court in October 2023. The High Court’s May 2026 order reversed the District Court’s decision, reinstating the arbitration award.

What the Numbers Show

The final settlement amount of ₹31.96 crore is nearly identical to the original withheld receivable of approximately ₹32 crore. This indicates that the primary financial impact of the litigation was the time value of money, addressed through the awarded interest rates of 9% and 4.5% on the principal and guarantees respectively.

Khadim India Limited reported a significant decline in profitability for the quarter ended June 30, 2026, with consolidated net profit falling to ₹5.22 million from ₹8.51 million in the same period of FY25. Total income from operations contracted by 14.8% to ₹836.68 million, reflecting broader headwinds in the consumer goods sector. The results were published on August 08, 2026, pursuant to Regulation 47 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board of Directors, at its meeting held on August 07, 2026, approved the unaudited standalone and consolidated financial results. The figures were reviewed by the Audit Committee prior to board approval. The full statement is available on the company’s website and the stock exchange portals.

Financial Performance Highlights

Standalone net profit after tax stood at ₹5.24 million, compared to ₹8.62 million in Q1FY25. Revenue from operations for the standalone entity was ₹836.68 million, down from ₹982.25 million in the previous year’s quarter. For context, total income for the full year ended March 31, 2026, was ₹3,778.67 million.

Capital Raise and Regulatory Impact

Members of the company approved the issuance of 10,22,727 Fully Convertible Equity Share Warrants at an Extra-ordinary General Meeting held on August 01, 2026. The warrants carry an exercise price of ₹110 per underlying equity share, with a face value of ₹10 and a premium of ₹100 per share. The aggregate issue size is up to ₹112.50 million.

Allotment of the warrants is subject to in-principle approval from the stock exchanges, which remains pending. Upon receipt of approval and 25% of the issue price from allottees, the warrants will be allotted within 15 days. They are convertible into equity shares within 18 months of allotment upon payment of the remaining 75% exercise price.

What the Numbers Show

The decline in net profit outpaced the drop in revenue, indicating margin compression during the quarter. While revenue fell by approximately 14.8%, pre-tax profit dropped by roughly 52% on a standalone basis (from ₹14.83 million to ₹7.09 million). This divergence suggests that fixed costs or operational inefficiencies absorbed a larger share of the reduced top-line growth. Additionally, the company continues to monitor the financial impact of the new Labour Codes notified in November 2025, which previously resulted in an exceptional item charge of ₹18.20 million in FY26 due to changes in wage definitions for gratuity and leave encashment.