Somi Conveyor Beltings filed its 26th annual report for FY26, revealing a contraction in profitability despite steady operational progress. The company reported a net profit after tax (PAT) of ₹503.06 lakh, down from ₹548.62 lakh in the previous year.

Revenue from operations stood at ₹10,074.43 lakh, reflecting a marginal decline of 0.49% compared to ₹10,123.77 lakh in FY25. Earnings before interest, tax, depreciation, and amortization (EBITDA) decreased by 1.64% to ₹989.23 lakh.

Financial Performance

The financial results for the year ended March 31, 2026, highlight a focus on deleveraging and working capital efficiency rather than top-line growth.

The Board did not recommend any dividend for FY26, opting to conserve resources for future growth and capital investment.

Balance Sheet and Liquidity

The company significantly improved its liquidity position during the year. The debt-equity ratio declined sharply from 0.28 to 0.17, driven by reduced reliance on temporary working capital facilities. Current borrowings fell to ₹1,179.29 lakh from ₹2,022.71 lakh in the prior year.

Trade receivables turnover improved substantially, with debtor days dropping from 143 to 87 days. This acceleration in collections strengthened cash flows, allowing the company to reduce current liabilities faster than current assets, thereby improving the current ratio from 2.04 to 2.85 times.

Capital Expenditure and Capacity

During FY26, Somi Conveyor Beltings completed the installation of a new mixing line at its Tanawara plant. The project, which cost ₹864.77 lakh, enhances compounding capacity for all conveyor belt grades, including steel cord belts. This expansion aims to support timely order execution and improve product quality through modern automation features.

Corporate Governance

The company scheduled its 26th Annual General Meeting for September 30, 2026. Key agenda items include the adoption of audited financial statements and the re-appointment of Mrs. Payal Daga as a Non-Executive Non-Independent Woman Director. M/s. Anchal Jain & Co was appointed as Cost Auditor for FY27 with remuneration of ₹35,000 plus taxes.

What the Numbers Show

The divergence between stable revenue and declining profits highlights the impact of higher other expenses, which rose to ₹1,744.09 lakh from ₹1,356.84 lakh in FY25. This increase includes a significant provision for bad debts of ₹93.23 lakh and bad debts written off amounting to ₹167.33 lakh, indicating past credit risks being cleared from the books. Despite this, the aggressive reduction in debt has positioned the balance sheet for lower interest outflows in future periods.

Somi Conveyor Beltings reported a 50.4% year-on-year decline in standalone net profit for the first quarter of FY27 (Q1FY27), dropping to ₹59.64 lakh from ₹1.20 crore in the corresponding period last year. The contraction was primarily driven by a sharp 40.5% fall in revenue from operations, which stood at ₹1,561.85 lakh compared to ₹2,624.31 lakh in Q1FY26. This performance highlights continued pressure on the industrial conveyor belt manufacturer as it navigates challenging market conditions and input cost volatility.

The Board of Directors approved the unaudited financial results on August 11, 2026, pursuant to Regulation 33 and 52 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results were limited reviewed by M/s Singhvi & Mehta, the statutory auditors of the company. The Board meeting commenced at 2:30 p.m. and concluded at 4:00 p.m.

Financial Performance Overview

Revenue from operations dropped significantly, reflecting weaker demand or pricing pressures in the sector. Other income remained relatively stable at ₹19.88 lakh, up slightly from ₹19.50 lakh in the previous quarter but down from ₹26.96 lakh in Q1FY26. Total revenue for the quarter stood at ₹1,581.73 lakh, compared to ₹2,651.27 lakh in the same period last year.

Expenses decreased proportionally to revenue, with total expenses falling 39.6% YoY to ₹1,502.02 lakh. However, the cost of materials consumed rose sharply to ₹1,348.91 lakh from ₹827.33 lakh in Q4FY26, indicating potential input cost inflation or changes in inventory management. Employee benefit expenses also increased to ₹116.96 lakh from ₹104.67 lakh in Q1FY26.

Key Ratios and Balance Sheet Signals

The company’s financial health indicators show mixed trends. While profitability metrics contracted, leverage improved. The debt-equity ratio decreased to 0.19 from 0.27 in the corresponding quarter last year, suggesting better capital structure management. Outstanding debt stood at ₹1,528.42 lakh, down from ₹2,063.40 lakh in Q1FY26.

Return on equity fell to 2.91% from 6.24% in Q1FY26, mirroring the decline in net profit. The inventory turnover ratio slowed to 1.36 times from 2.33 times in the previous year’s corresponding quarter, indicating slower stock movement relative to sales.

What the Numbers Show

A critical observation is the divergence between expense reduction and profit decline. While total expenses fell 39.6% YoY, net profit dropped 50.4%. This suggests that fixed costs or specific variable costs did not scale down as quickly as revenue. Notably, the cost of materials consumed increased significantly quarter-on-quarter, rising from ₹827.33 lakh in Q4FY26 to ₹1,348.91 lakh in Q1FY27, despite the revenue decline. This spike in material costs, combined with a slowdown in inventory turnover, points to potential inefficiencies in supply chain management or raw price volatility impacting margins disproportionately. The interest service coverage ratio also weakened to 3.40 times from 6.06 times in Q1FY26, highlighting reduced operational buffer against debt obligations.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE323J01019/7fb46340-4233-447b-a041-63d4f8b18c0a.pdf