Zenith Exports Limited disclosed a financial penalty of ₹3,95,300 imposed by stock exchanges for the financial year ended March 31, 2026, due to non-compliance with Board composition regulations. The fine was levied by both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) after the company failed to maintain the required number of directors, falling below the mandated six. The company has since filed a waiver application for the fine on March 11, 2026, and appointed two new directors to restore compliance.

Regulatory Deviations and Penalties

The Annual Secretarial Compliance Report, prepared by M & A Associates, identified a specific deviation under Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The report noted that the composition of the Board was not compliant as the number of directors was less than the statutory requirement. Consequently, the exchanges imposed a monetary fine, details of which are summarized below:

Remedial Actions and Board Appointments

In response to the non-compliance, the management stated that the vacancy was inadvertent and that identifying suitable candidates took time. To rectify the situation, the company appointed Priyanka Poddar (DIN: 10481007) and Subhajeet Kar (DIN: 07148810) as Non-Executive Independent Directors on March 6, 2026. These appointments restored the Board's compliance with the prescribed composition requirements.

Previous Compliance Observations

The report also highlighted actions taken to address observations from the previous fiscal year. A delay of 11 days was reported in disclosing the transfer of equity shares by promoter Rajkumar Loyalka to promoter group member Ruchi Loyalka, violating Regulation 10(5) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The company has since submitted the required disclosure. Additionally, a delay in filing the promoter's declaration regarding encumbrance under Regulation 31(4) was noted and subsequently rectified.

Overall Compliance Status

Despite the specific deviations, the report confirmed that Zenith Exports Limited has complied with applicable Secretarial Standards, maintained its website disclosures, and conducted performance evaluations for the Board and its committees. No further actions were taken by SEBI or the stock exchanges against the entity, its promoters, or directors beyond the stated fine.

Zenith Exports returned to profitability in the financial year ended March 31, 2026, reporting a net profit of ₹229 lakh, a significant turnaround from a loss before tax of ₹208 lakh in the previous year. For the quarter ended March 31, 2026, the company recorded a net loss of ₹12 lakh. Revenue from operations for the year declined to ₹6,468 lakh from ₹7,210 lakh in FY25, while quarterly revenue stood at ₹1,310 lakh compared to ₹2,089 lakh in the corresponding period last year.

The Board of Directors approved the standalone audited financial results at a meeting held on May 29, 2026. The statutory auditors, M/s. V. Goyal & Associates, Chartered Accountants, issued an audit report with an unmodified opinion on the financial results. The Board also appointed M/s. Rohit Jalan & Associates as the internal auditor for the financial year 2026-27.

Financial Performance

The company's total income for FY26 stood at ₹6,919 lakh, down from ₹7,617 lakh in FY25. Total expenditure for the year decreased to ₹6,594 lakh from ₹7,825 lakh in the previous year. The profit before tax for the year was ₹325 lakh. However, for the quarter ended March 31, 2026, the company reported a loss before tax of ₹9 lakh.

Segment Results

The Industrial Leather Hand Gloves/Made-ups segment remained the largest revenue contributor, generating ₹4,257 lakh for the year, though this was lower than the ₹5,121 lakh recorded in the previous year. The Silk Fabrics/Made-ups segment reported revenue of ₹938 lakh, while the EOU - Silk Fabrics segment brought in ₹1,273 lakh.

Assets and Liabilities

The company's total assets as of March 31, 2026, stood at ₹9,796 lakh, a decrease from ₹10,088 lakh in the previous year. Total equity increased to ₹8,411 lakh from ₹8,197 lakh. Current liabilities reduced significantly to ₹1,096 lakh from ₹1,670 lakh in the prior year, while non-current liabilities stood at ₹289 lakh compared to ₹221 lakh.

The cash flow statement for the year ended March 31, 2026, showed a net cash inflow from operating activities of ₹541 lakh. The company reported a net cash outflow from financing activities of ₹633 lakh, primarily due to the repayment of short-term borrowings. Cash and cash equivalents at the end of the year were ₹609 lakh.