Nilkamal Limited received an appellate order on September 10, 2026, rejecting its challenge to a Goods and Services Tax (GST) penalty of ₹7.22 lakh. The Joint Commissioner CGST & Central Excise (Appeals), Siliguri Appeal Commissionerate, upheld the original demand raised in November 2025.

The appellate authority confirmed the tax dues and penalty under Section 74(1) of the CGST Act, 2017, read with Section 20 of the IGST Act, 2017. The dispute centered on the alleged wrongful availment and utilization of Input Tax Credit (ITC) for the fiscal years 2018-19 and 2019-20 in West Bengal.

Order Details

The breakdown of the confirmed demand is as follows:

The original order was issued by the Superintendent of CGST & Central Excise, Barjora Bankura, West Bengal. Nilkamal had filed an appeal against this decision, which was dismissed vide the Order-in-Appeal dated August 31, 2026.

Financial Impact

Nilkamal stated that the company will take necessary course of action based on professional advice. The firm disclosed that there is no material impact on its financial or operational activities due to this order.

What the Numbers Show

The penalty amount equals the tax dues exactly, reflecting the standard 100% penalty structure often applied in cases of suppressed turnover or wrongful ITC claims under Section 74. Given the total exposure of less than ₹1 lakh relative to the company’s scale, the financial implication remains negligible.

Nilkamal Limited reported a significant improvement in profitability for the first quarter of FY27, with consolidated net profit rising to ₹243 million from ₹152 million in the year-ago period. EBITDA grew to ₹746 million from ₹580 million in the corresponding period last year, with the EBITDA margin expanding to 9.10% from 6.57% year-on-year. Consolidated revenue stood at ₹8.2 billion, down from ₹8.8 billion in the year-ago period. On a standalone basis, net profit after tax (PAT) surged 145% year-on-year to ₹23 crore, even as standalone revenue from operations declined 8% to ₹799 crore. The Board of Directors, meeting on August 1, 2026, approved the unaudited financial results, which were reviewed by statutory auditors S R B C & Co LLP with an unmodified opinion.

The divergence between revenue contraction and profit expansion stems from strategic pricing actions and segment-specific performance. While the Business-to-Business (B2B) segment faced a severe 37% volume degrowth due to raw material costs rising approximately 50% since March 2026, management mitigated the impact through proactive price increases and product mix optimization. Consequently, B2B value degrowth was contained to 10%, and profitability in this segment remained stable. In contrast, the Retail and E-commerce segment emerged as a key growth driver, expanding 13% year-on-year to ₹104 crore and turning profitable with an EBIT of ₹1.68 crore, compared to a loss of ₹9.5 crore in the corresponding quarter of the previous year.

Consolidated figures reflect similar trends, with net sales standing at ₹820 crore against ₹883 crore in Q1FY26. The company's balance sheet also showed improvement, with net borrowings declining to ₹116 crore as of June 30, 2026, down from ₹331 crore a year earlier. Capital expenditure during the quarter stood at ₹41 crore, up from ₹36 crore in Q1FY26, indicating continued investment in capacity and efficiency.

Key Financial Highlights

The following table summarises the key financial metrics for the latest quarter:

Segment Performance Breakdown

The performance variance across business units underscores the shifting demand dynamics within Nilkamal's portfolio. The following table details the standalone segment-wise results:

Within the B2B segment, performance was mixed. The Mattress and Foam Business grew by 49%, and Ready Furniture expanded by 20%. However, these gains were offset by declines in Plastic Furniture (-13%), Material Handling (-16%), and Bubbleguard (-36%). The Retail network, comprising 100 stores under the COCO and FOFO formats, saw store-based growth of 6%, while e-commerce channels grew faster at 22%.

What the Numbers Show

A critical observation from the filing is the decoupling of volume growth from profitability. Nilkamal demonstrated pricing power by absorbing a ~50% surge in raw material costs without passing on the full impact to customers, thereby preserving margins. The operating margin improved to 8.75% from 6.27% in Q1FY26, and the EBITDA margin expanded to 9.10% from 6.57%, suggesting that the current strategy of mix optimisation and selective price hikes is effective in shielding bottom-line results even when top-line volumes contract. This resilience is further supported by a strong debt service coverage ratio of 4.03 times, indicating robust cash flow generation relative to debt obligations.

CARE Ratings Ltd reaffirmed Nilkamal's long-term credit rating as CARE AA Stable and short-term rating as CARE A1+, citing the company's strong market position and consistent cash flows. The company disclosed an exceptional item provision of ₹1,541 lakhs towards gratuity and leave liability due to new Labour Codes effective November 21, 2025, which impacted prior year comparables but did not affect the current quarter's operational metrics.