Sri Nachammai Cotton Mills has disclosed its related party transactions for the half year ended March 31, 2026. The report, submitted to the stock exchange, outlines the financial dealings between the company and its key management personnel (KMP) as well as specific enterprises where KMP hold significant influence.

Related Party Enterprises

The disclosure identifies two enterprises where key management personnel along with their relatives possess significant influence: Supreme Yarn Spinners Private Ltd and Raja Yarns Private Limited. The Key Management Personnel listed include Shri P. Palaniappan (Managing Director), Smt. P. Umayal (Chairman cum Managing Director), Sri. A. Subramanian (CFO), and CS M. Harish (Company Secretary).

Transactions During the Year

The company engaged in various financial transactions with these related parties during the financial year 2025-26. Corporate loans were taken from Raja Yarns Private Limited amounting to ₹28.90 lakh and from Supreme Yarn Spinners Private Limited amounting to ₹1,021.25 lakh. Conversely, the company repaid ₹52.30 lakh to Raja Yarns Private Limited and ₹1,143.70 lakh to Supreme Yarn Spinners Private Limited.

Unsecured loans were taken from Smt. P. Umayal amounting to ₹317.65 lakh, while no unsecured loans were taken from Shri P. Palaniappan during this period. The company repaid ₹57.33 lakh to Shri P. Palaniappan and ₹190.00 lakh to Smt. P. Umayal. Additionally, the company paid interest on unsecured loans to various parties, including ₹35.01 lakh to Smt. P. Umayal.

Operational and Remuneration Details

The company also recorded transactions for the sale of stock in trade and managerial remuneration. Sales to Supreme Yarn Spinners Private Ltd and Raja Yarns Private Limited were recorded at ₹63.48 lakh and ₹38.90 lakh respectively. Managerial remuneration was distributed among the KMP, with Shri P. Palaniappan receiving ₹15.16 lakh and Smt. P. Umayal receiving ₹15.21 lakh.

Outstanding Balances

As of the end of the reporting period, the company reported outstanding payables to its related parties. The highest outstanding payable was to Supreme Yarn Spinners Private Limited at ₹1,566.06 lakh, followed by Smt. P. Umayal at ₹1,080.52 lakh. Outstanding payables to Raja Yarns Private Limited stood at ₹1,238.85 lakh, while those to Shri P. Palaniappan were recorded at ₹946.57 lakh.

Sri Nachammai Cotton Mills Limited reported its audited standalone financial results for the quarter and year ended March 31, 2026, revealing a continued loss-making position amid persistent weakness in yarn demand and a disparity between cotton and yarn prices. The results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on May 19, 2026. Statutory auditors M/S. Gopalaiyer and Subramanian, Chartered Accountants (Firm Registration No. 000960S), issued an unmodified audit opinion on the financial statements.

Annual Financial Performance

For the full year ended March 31, 2026, the company's revenue from operations declined to ₹6,452.91 lakhs from ₹6,917.34 lakhs in the previous year. Other income also fell sharply to ₹24.38 lakhs from ₹137.48 lakhs, bringing total revenue to ₹6,477.29 lakhs compared to ₹7,054.82 lakhs in FY25. Total expenses for the year stood at ₹7,170.83 lakhs against ₹7,457.73 lakhs in the prior year, resulting in a pre-exceptional loss of ₹693.54 lakhs. An exceptional item of ₹658.88 lakhs—arising from the modification of redeemable preference share terms—narrowed the pre-tax loss to ₹34.66 lakhs for FY26, compared to ₹402.91 lakhs in FY25. After accounting for tax adjustments, the net loss for the year stood at ₹379.75 lakhs versus ₹320.50 lakhs in the prior year.

Quarterly Financial Performance

For the quarter ended March 31, 2026, revenue from operations stood at ₹1,488.15 lakhs, compared to ₹1,831.36 lakhs in the corresponding quarter of the previous year. Total revenue for the quarter was ₹1,496.03 lakhs against ₹1,861.58 lakhs in Q4 FY25. The net loss for the quarter widened to ₹506.76 lakhs from ₹60.69 lakhs in the same period last year, primarily due to deferred tax adjustments. Total comprehensive loss for the quarter was ₹508.54 lakhs compared to ₹62.12 lakhs in Q4 FY25.

Balance Sheet Highlights

As at March 31, 2026, the company's total assets stood at ₹9,374.43 lakhs, marginally lower than ₹9,389.53 lakhs as at March 31, 2025. Total equity declined to ₹1,228.68 lakhs from ₹1,611.03 lakhs, reflecting the accumulated losses during the year. Non-current borrowings reduced to ₹2,582.03 lakhs from ₹3,142.00 lakhs, while current borrowings increased to ₹2,310.94 lakhs from ₹1,421.12 lakhs. Property, plant and equipment increased to ₹4,952.76 lakhs from ₹3,888.35 lakhs, reflecting capital expenditure during the year.

Key Operational and Accounting Developments

Several notable developments shaped the company's financial performance during the year:

• Exceptional Item: The company had issued redeemable preference shares to its promoters on April 26, 2012, amounting to ₹15,00,00,000 (Rupees Fifteen Crores), with an original maturity of 13 years. Following approval at an Extraordinary General Meeting of preference shareholders on September 13, 2024, and a special resolution passed at an EGM on December 3, 2024, the redemption period was extended by an additional 7 years. In accordance with Ind AS 109, the modification was assessed as a substantial modification, resulting in derecognition of the existing liability and recognition of a new financial liability at its present value of ₹8,41,12,213/-. The difference of ₹6,58,87,787/- was recognised as income and reported as an exceptional item, resulting in a one-time income recognition of ₹6.58 crores for the year ended March 31, 2026.
• Power and Fuel Cost Reduction: Power and fuel costs declined significantly to ₹82.83 lakhs in Q4 FY26 from ₹190.46 lakhs in Q4 FY25. For the full year, power and fuel costs reduced to ₹455.39 lakhs from ₹740.60 lakhs in FY25, primarily attributable to captive use of electricity generated from the 4 MW Solar power plant commissioned during FY2024–25.
• Operational Constraints: The current quarter continued to witness poor demand for yarn, with a continued disparity in cotton prices compared to yarn prices. As a result, the company operated only one unit for 3 shifts, with depreciation provided accordingly.
• Deferred Tax Asset: During the year ended March 31, 2026, the company recognised a deferred tax asset on unabsorbed business losses and unabsorbed depreciation, based on the probability of sufficient taxable profits from continuing operations, improved market conditions, operational restructuring, and planned sale of unproductive assets.
• Labour Codes: The Government of India notified four Labour Codes on November 21, 2025, consolidating 29 existing labour laws. The company assessed that no material incremental liability arises for employees and is in the process of evaluating the impact for contract workforce.

Cash Flow Summary

Net cash from operating activities improved significantly to ₹1,349.01 lakhs for the year ended March 31, 2026, compared to ₹38.71 lakhs in the prior year. Net cash used in investing activities was ₹(1,323.84) lakhs, primarily on account of purchase of property, plant and equipment of ₹(1,310.61) lakhs. Net cash used in financing activities was ₹(25.47) lakhs. Cash and cash equivalents at the end of the year stood at ₹2.14 lakhs compared to ₹2.44 lakhs at the beginning of the year.

The paid-up equity share capital of the company remained unchanged at ₹428.64 lakhs with a face value of ₹10.00 per share. Other equity (reserves excluding revaluation reserves) stood at ₹800.04 lakhs as at March 31, 2026, compared to ₹1,182.39 lakhs as at March 31, 2025. The company's main business is the manufacture and sale of yarn and related products, with no separate reportable segments as per Ind AS 108.