Seshachal Technologies Limited reported a sharp decline in profitability for FY26, with net profit after tax falling 91% to ₹0.16 million (₹1.62 lakh) from ₹1.90 million in the previous year. The drop occurred despite revenue from operations more than doubling to ₹128.53 million from ₹67.40 million.

The company scheduled its 32nd Annual General Meeting (AGM) for September 30, 2026, at 12:00 pm via video conference. Shareholders will vote on the adoption of financial statements and the appointment of Mr. Raj Singh Rawat as Managing Director for five years.

Financial Performance

Revenue growth was driven by increased sales and software support services. However, cost of materials consumed rose significantly to ₹112.67 million, compared to nil in FY25, compressing margins. Employee benefit expenses dropped sharply to ₹5.47 million from ₹63.71 million, while administrative charges increased tenfold to ₹10.01 million.

Balance Sheet Highlights

Total assets decreased to ₹76.66 million from ₹105.35 million, primarily due to a reduction in closing work-in-progress inventory to ₹64.21 million from ₹83.90 million. The company cleared its short-term borrowings of ₹6.23 million, resulting in zero borrowings as on March 31, 2026. Cash and cash equivalents improved to ₹5.17 million from ₹1.24 million.

Corporate Governance

Mr. Prabhaker Reddy Aedla resigned as Managing Director and CFO effective April 23, 2026. Mr. Raj Singh Rawat was appointed as Additional Director designated as Managing Director and CFO on the same date. His formal appointment for a five-year term is subject to shareholder approval at the upcoming AGM. Mr. Manish Kumar Jain resigned as an Independent Director in May 2026.

The Secretarial Audit Report noted that the appointment of Mr. Nilesh Sharma as an Independent Director did not appear to conform to eligibility criteria under Section 149(6)(e) of the Companies Act, 2013, as he was an employee of the company during FY24-25.

Related Party Transactions

The company disclosed arm's length transactions with related parties, including purchases from Think Big Enterprises Private Limited (₹4.68 million) and Flora Corporation Limited (₹66.69 million). Mr. Rajesh Gandhi, a director of Seshachal Technologies, holds directorships in both entities.

Seshachal Technologies Limited reported a standalone net profit of ₹5.88 lakh for the quarter ended June 30, 2026, marking a significant decline from the ₹9.91 lakh profit recorded in the corresponding period of FY25. While the company’s revenue from operations expanded robustly by 73.1% year-on-year to ₹386.57 lakh, the bottom line contracted due to rising cost pressures and lower earnings per share.

The Hyderabad-based technology firm saw its basic and diluted earnings per share (EPS) drop to ₹0.85 from ₹1.43 in Q1FY26. This represents a 40.5% fall in per-share profitability, reflecting the disproportionate impact of expense growth relative to revenue gains during the period.

Financial Performance

The company’s total income for the quarter stood at ₹386.57 lakh, with no contribution from other income, compared to a net other income loss of ₹0.46 lakh in Q1FY25. Total expenses rose to ₹378.72 lakh from ₹209.63 lakh in the prior year quarter, an increase of approximately 80.7%. This sharp rise in expenditures outpaced the growth in top-line revenue, squeezing margins.

Cost of materials consumed was the largest expense head at ₹371.84 lakh, constituting nearly 95.5% of total expenses. In contrast, administrative charges fell sharply to ₹2.43 lakh from ₹44.67 lakh in Q1FY26, indicating a reduction in overheads. Employee benefits expense also decreased to ₹4.33 lakh from ₹21.01 lakh year-on-year.

What the Numbers Show

A critical divergence is visible between the company’s top-line growth and its profitability metrics. While revenue surged by over 70%, net profit declined by more than 40%. The data reveals that the cost of materials consumed (₹371.84 lakh) absorbed almost all of the new revenue generated (₹386.57 lakh), leaving minimal room for operating profit. This suggests that while sales volume or value increased significantly, the gross margin on these operations remained extremely thin, with material costs acting as the primary drag on overall profitability despite substantial cuts in administrative and employee expenses.

Balance Sheet and Capital

As of June 30, 2026, the company’s paid-up equity share capital remained unchanged at ₹69.43 lakh. Reserves excluding revaluation reserves stood at ₹90.99 lakh, consistent with the previous quarter’s position. The company operates as a single reportable segment under Indian Accounting Standard 108, making segment-wise reporting inapplicable.

The unaudited financial results were reviewed by the Audit Committee and approved by the Board of Directors on August 14, 2026. Sharad Chandra Toshniwal & Co., Chartered Accountants, issued the limited review report, confirming that the statements comply with Ind AS 34 and SEBI Listing Regulations.