Sonal Mercantile has scheduled its 41st Annual General Meeting for September 30, 2026, with shareholders set to approve a significant increase in the related party transaction (RPT) limit with its associate company. The Board approved the notice and dates in a meeting held on September 2, 2026.

The primary special business item involves seeking omnibus approval for material related party transactions with Rudraveerya Developers Limited, an associate company. The proposed aggregate amount outstanding at any point in time is raised to ₹250 crore, up from the previous limit of ₹200 crore approved at the 40th AGM. This increase aligns with amendments to Regulation 23(4) of the SEBI LODR Regulations effective December 19, 2025.

Key Dates and Procedures

Shareholders must note the following critical dates for the upcoming general meeting:

The register of members and share transfer books will remain closed from September 24 to September 30, 2026, inclusive. This closure is mandated under Regulation 42 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and Section 91 of the Companies Act, 2013. Remote e-voting services are provided by NSDL.

Ordinary Business and Director Re-appointment

The ordinary business includes the adoption of audited financial statements for the year ended March 31, 2026. Additionally, shareholders will vote on the re-appointment of Mr. Rajan Goyal as a Non-Executive Director, who retires by rotation. Mr. Goyal has been with the company since November 23, 2018, and brings experience in accounts, taxation, and marketing.

Related Party Transaction Details

Sonal Mercantile holds a 42.44% equity stake in Rudraveerya Developers Limited, while the associate holds a 24.74% stake in Sonal Mercantile. The transactions involve loans taken, repaid, and interest charged in the ordinary course of business at arm's length pricing.

During FY26, the financial interactions included:

• Net Loan Received (H1 FY26): ₹65.41 crore
• Net Loan Repaid (H2 FY26): ₹26.86 crore
• Interest Charged (FY26): ₹5.18 crore

The proposed approval covers the period from the 41st AGM until the 42nd AGM. The Audit Committee has reviewed these transactions and recommended them for shareholder approval, noting they are commercially beneficial and conducted at arm's length.

Financial Context

For FY26, Sonal Mercantile reported a total income of ₹4,075.74 lakh and a profit after tax of ₹1,146.80 lakh, compared to ₹3,529.37 lakh and ₹1,040.68 lakh respectively in the previous year. The company did not recommend any dividend for the year to maintain liquidity.

The board of directors of Sonal Mercantile Limited approved the unaudited standalone and consolidated financial results for the quarter ended June 30, 2026, during a meeting held on August 12, 2026. The non-banking financial company (NBFC) reported a sharp contraction in standalone net profit, which declined to ₹91.42 lakh from ₹229.11 lakh in the corresponding quarter of FY25. This represents a 60% year-on-year drop in bottom-line figures.

Consolidated results showed a similar downward trajectory in per-share metrics. Earnings per share (EPS) on a consolidated basis fell to ₹1.97 from ₹6.40 in Q1FY25. While the company maintained its paid-up equity capital at ₹1,473.85 lakh, the overall comprehensive income for the group contracted significantly compared to the previous fiscal period. Standalone comprehensive income was recorded at ₹225.75 lakh, up slightly from ₹219.34 lakh in Q1FY25, while consolidated comprehensive income stood at ₹259.68 lakh, down sharply from ₹1,303.33 lakh.

Financial Performance

Revenue from operations, primarily derived from interest income, stood at ₹519.88 lakh for the quarter, down from ₹934.46 lakh in Q1FY25. Total expenses decreased to ₹436.46 lakh from ₹628.13 lakh in the prior year, largely due to a reduction in finance costs.

Finance costs, the largest component of expenditure, were recorded at ₹400.18 lakh, a decrease from ₹604.57 lakh in the same quarter last year. Employee benefit expenses remained stable at ₹12.82 lakh. The company reported no impairment of financial instruments for the current quarter, whereas it had booked an impairment charge of ₹6.83 lakh in Q1FY25.

Balance Sheet and Ratios

Analytical ratios indicate a shift in the company’s leverage profile. The debt-equity ratio improved to 2.41 from 5.28 in Q1FY25. Similarly, the total debt-to-total asset ratio declined to 0.69 from 0.82. These changes suggest a reduction in relative leverage, although absolute debt levels require context from the full balance sheet not provided in the quarterly summary.

The net profit margin compressed to 0.18 from 0.25 in the previous year. For the full year ended March 31, 2026, the company had reported a net profit margin of 0.28 and total revenue from operations of ₹4,075.75 lakh.

What the Numbers Show

A key observation is the divergence between expense management and revenue generation. While finance costs dropped by approximately 34% year-on-year (from ₹604.57 lakh to ₹400.18 lakh), interest income fell by a sharper margin of roughly 44% (from ₹934.46 lakh to ₹519.88 lakh). This indicates that the decline in yield or volume of lending activities outpaced the reduction in borrowing costs, leading to a narrower operating buffer. Additionally, the reversal of impairment charges contributed ₹38.80 lakh to other income, providing a minor offset to the core operational slowdown.

Regulatory and Audit Details

The financial statements were prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013. Ajay Rattan & Co., Chartered Accountants, conducted the limited review of the interim financial information. The audit report confirmed that nothing came to their attention to suggest material misstatement in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The board also noted the secretarial audit report for the year ended March 31, 2026, issued by PCS Nitin Gupta. The consolidated results include the share of profit from the associate company, Rudraveerya Developers Limited, which contributed ₹172.64 lakh to the group’s bottom line for the quarter.