Shree Narmada Aluminium turns profitable in Q1FY27 on other income
Shree Narmada Aluminium Industries Limited (SNAIL) returned to profitability in Q1FY27 with a net profit of ₹0.60 lakh, driven by other income as operational revenue remained zero. The company regained possession of its Bharuch factory after the Supreme Court confirmed its rehabilitation scheme. However, statutory auditors issued a qualified report, highlighting fully eroded net worth and significant doubt on the company’s ability to continue as a going concern.
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Shree Narmada Aluminium Industries Limited (SNAIL) returned to profitability in the first quarter of FY27 (Q1FY27), reporting a net profit of ₹0.60 lakh compared to a net loss of ₹1.32 lakh in the same period of FY26. The positive result was driven entirely by other income of ₹6.68 lakh, as revenue from operations remained at zero. This financial improvement coincides with a critical legal milestone: the Supreme Court confirmed the company’s rehabilitation scheme on August 4, 2025, allowing SNAIL to regain possession of its factory premises in Bharuch. However, statutory auditors SVH & Associates issued a qualified limited review report, casting significant doubt on the company’s ability to continue as a going concern due to fully eroded net worth.
The Board of Directors approved the unaudited standalone financial results during a meeting held on August 11, 2026, in Mumbai. The results were reviewed by the Audit Committee and subjected to a limited review by SVH & Associates, the company’s statutory auditors. The filing was made pursuant to Regulation 33(3)(d) and Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The auditor’s qualification notes that while management believes the going concern assumption is sustainable based on legal opinions, the financial statements do not adequately disclose the uncertainty regarding the company’s continuity.
Financial Performance
Total expenses for Q1FY27 decreased significantly to ₹6.08 lakh from ₹1.32 lakh in Q1FY26. This reduction was primarily due to the absence of finance costs in the current quarter, whereas finance costs accounted for a substantial portion of expenses in previous periods. Employee benefit expenses were ₹0.52 lakh, and depreciation and amortisation expenses amounted to ₹0.17 lakh. Other expenses rose to ₹5.39 lakh from ₹0.60 lakh in the prior year quarter.
| Particulars | Q1FY27 (₹ Lakh) | Q1FY26 (₹ Lakh) | Change |
|---|---|---|---|
| Revenue from Operations | - | - | - |
| Other Income | 6.68 | - | +6.68 |
| Total Income | 6.68 | - | +6.68 |
| Total Expenses | 6.08 | 1.32 | +4.76 |
| Profit/(Loss) Before Tax | 0.60 | (1.32) | +1.92 |
| Net Profit/(Loss) | 0.60 | (1.32) | +1.92 |
| EPS (Basic & Diluted) | 0.12 | (0.25) | +0.37 |
For the full year ended March 31, 2026, the company reported a net loss of ₹68.39 lakh, with total expenses reaching ₹68.39 lakh against zero revenue. Finance costs accounted for ₹43.10 lakh of the annual expenses.
Legal and Operational Developments
SNAIL had previously undergone proceedings under the Sick Industrial Companies Act, 1985, leading to a compromise scheme approved by the High Court of Gujarat on May 16, 2008. A secured creditor challenged this order, resulting in an ex parte order by the Debt Recovery Tribunal-III, Mumbai, in January 2015, which appointed a court receiver for the factory. The High Court of Gujarat dismissed the creditor’s appeal on March 10, 2025. Subsequently, the Supreme Court passed an order on August 4, 2025, confirming the Scheme of Arrangement. As a result, SNAIL has obtained possession of its factory premises at Bharuch.
Cash Flow and Balance Sheet Signals
Despite the profit on paper, cash flow from operating activities was negative at ₹3.85 lakh for Q1FY27, compared to ₹1.49 lakh in Q1FY26. This outflow was driven by a decrease in other financial assets of ₹0.53 lakh and an increase in other current liabilities of ₹4.07 lakh. Financing activities showed an increase in borrowings of ₹6.84 lakh, leading to a net increase in cash and cash equivalents of ₹2.99 lakh. The closing cash balance stood at ₹4.23 lakh as of June 30, 2026, up from ₹1.24 lakh at the beginning of the quarter.
What the Numbers Show
The shift from a loss to a profit in Q1FY27 is largely attributable to non-operating items rather than core business activity. With revenue from operations remaining at zero, the ₹6.68 lakh in other income—likely interest or miscellaneous receipts—was sufficient to cover the reduced expense base. The absence of finance costs in the current quarter, compared to ₹43.10 lakh in the full previous year, suggests a potential reduction in debt servicing obligations or a change in borrowing structure. However, the cash flow statement shows an increase in borrowings of ₹6.84 lakh during the quarter, indicating continued reliance on external funding. Investors should note that the profitability is fragile, dependent on continued low operating costs and non-operating income, while the auditor’s qualification highlights persistent balance sheet weaknesses and eroded net worth.
What is the specific timeline for SNAIL to restart commercial operations at the Bharuch factory now that possession has been regained?
How does the company plan to address the auditor's qualified opinion regarding its going concern status and fully eroded net worth?
Given that revenue from operations remains at zero, what are the primary sources of the reported 'other income' and are they sustainable?
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