Modern Denim reports wider Q4 loss amid revenue decline
Modern Denim Limited reported a net loss of ₹308.19 lacs for Q4FY26, widening from ₹190.16 lacs in the prior year, as revenue dropped to ₹678.89 lacs. Statutory auditors issued a qualified opinion due to the non-provision of interest liabilities totaling ₹757.12 lacs. The company faces material uncertainties regarding its going concern status, with negative net worth of ₹7529.82 lacs, pending NCLT approval for a compromise scheme.
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Modern Denim Limited reported a wider net loss of ₹308.19 lacs for the quarter ended March 31, 2026, compared to a loss of ₹190.16 lacs in the corresponding period of the previous year. The company's revenue from operations fell to ₹678.89 lacs from ₹790.82 lacs in Q4FY25, while total revenue stood at ₹697.23 lacs. For the full financial year FY26, the company recorded a net loss of ₹890.48 lacs on a total revenue of ₹2323.99 lacs.
Qualified Opinion and Audit Findings
J. T. Shah & Co., the statutory auditors, issued a qualified opinion on the standalone financial results. The qualification arises because the company did not provide for interest on financial liabilities using the effective interest method as per Ind AS 109. Specifically, provisions for interest amounting to ₹110.75 lacs on cumulative redeemable preference shares, ₹61.41 lacs on secured and unsecured borrowings, and ₹584.96 lacs on non-current borrowings were not made in the accounts.
Financial Performance
Total expenses for the quarter increased to ₹1005.42 lacs from ₹1047.41 lacs in the prior year. The company reported a basic and diluted loss per share of ₹0.82 for Q4FY26, compared to a loss of ₹0.51 in the same quarter last year. For the year ended March 31, 2026, the loss per share widened to ₹2.37 from ₹1.52 in the previous year.
| Metric | Q4FY26 (₹ in lacs) | Q4FY25 (₹ in lacs) | FY26 (₹ in lacs) | FY25 (₹ in lacs) |
|---|---|---|---|---|
| Revenue from Operations | 678.89 | 790.82 | 2289.67 | 2237.16 |
| Total Revenue | 697.23 | 857.25 | 2323.99 | 2304.77 |
| Total Expenses | 1005.42 | 1047.41 | 3059.15 | 2874.55 |
| Net Profit/(Loss) | (308.19) | (190.16) | (890.48) | (569.78) |
Material Uncertainties and Going Concern
The auditors highlighted material uncertainties related to the company's ability to continue as a going concern. Modern Denim's net worth is fully eroded, standing at a negative ₹7529.82 lacs as of March 31, 2026, compared to a negative ₹6639.80 lacs in the previous year. The company has filed a scheme of compromise, arrangement, and amalgamation before the National Company Law Tribunal (NCLT). The NCLT disposed of the petition on January 22, 2026, granting the company liberty to reapproach upon completing regulatory requirements, including obtaining approval from BSE.
Regulatory and Scheme Updates
The company has initiated the necessary regulatory process and re-submitted an application to BSE to obtain the requisite approval, which is currently under consideration. Based on expected relief from the NCLT and expert opinion, the management believes that amounts related to equity share application money, cumulative redeemable preference shares, non-convertible debentures, and public deposits are not required to be transferred to the Investor Education Protection Fund (IEPF). The financial statements have been prepared on a going concern basis despite the negative net worth.
What is the expected timeline for BSE approval following the re-submission of the application?
How will the company address the ₹757.12 lacs in unprovided interest liabilities if the NCLT scheme is delayed?
What specific operational turnaround strategies are planned to reverse the declining revenue trend?
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