KG Denim Limited , a prominent player in the textile industry, has reported a mixed bag of financial results for the quarter ended September 30, 2025. The company has managed to turn a profit despite facing significant challenges, including a sharp decline in revenue and ongoing issues with trade creditors.

Financial Performance

KG Denim posted a standalone net profit of ₹187.00 lakhs for the quarter ended September 30, 2025, marking a significant turnaround from the losses reported in previous quarters. However, this positive bottom line comes against the backdrop of a substantial revenue decline.

The company's revenue saw a sharp decline of 81.51% year-over-year, dropping from ₹11.90 crores in Q2 FY2025 to ₹2.20 crores in Q2 FY2026. Despite this significant reduction in top-line performance, KG Denim managed to improve its EBITDA from a negative ₹12.20 crores to a positive ₹12.70 crores, indicating substantial cost-cutting measures and operational efficiency improvements.

Operational Highlights

The company's operating profit margin (OPM) saw a remarkable improvement, rising from -103.04% in Q2 FY2025 to 663.10% in Q2 FY2026. This unusual figure suggests that the company might have benefited from exceptional items or significant cost reductions that outweighed the revenue decline.

Interest expenses remained a concern, increasing from -₹0.20 crores in Q2 FY2025 to ₹8.00 crores in Q2 FY2026, potentially indicating higher debt levels or increased borrowing costs.

Challenges with Trade Creditors

While KG Denim has shown resilience in its profit figures, the company faces significant challenges with its trade creditors. Out of total trade creditors amounting to ₹7,098.00 lakhs, the company is dealing with recovery notices totaling ₹942.00 lakhs. This situation highlights potential liquidity pressures and the need for careful management of supplier relationships.

KG Denim has reported that it is actively negotiating settlements with these creditors. Some of these negotiations have already resulted in settlements, while others are ongoing. The company has also submitted a payment schedule to creditors who have approached the National Company Law Tribunal (NCLT), indicating a proactive approach to addressing these financial obligations.

Looking Ahead

The textile industry continues to face headwinds, and KG Denim's significant revenue decline reflects these challenges. However, the company's ability to turn a profit despite these obstacles suggests that management has implemented effective cost-control measures and operational improvements.

Investors and stakeholders will be closely watching how KG Denim manages its creditor issues and whether it can sustain its profitability while working to rebuild its revenue base. The company's future performance will likely depend on its ability to resolve creditor disputes, manage its debt effectively, and capitalize on any recovery in the textile market.

As the situation evolves, it will be crucial for KG Denim to maintain transparency with its stakeholders and continue its efforts to strengthen its financial position and operational efficiency.

KG Denim Limited , a prominent player in the textile industry, has announced significant corporate actions following a meeting of its Board of Directors on November 21, 2025. The company has made two key decisions regarding its capital structure:

Warrant Allotment Deferred

The Board of Directors has decided to defer the allotment of 13,47,000 warrants that were convertible into equity shares. This decision suggests a temporary pause in the company's plans to potentially expand its equity base through the conversion of these warrants.

Preference Share Issuance

In a separate move, KG Denim informed that it plans to proceed with a preferential allotment of preference shares. The details of this allotment are as follows:

This preferential allotment of preference shares indicates that KG Denim is looking to raise capital without immediately diluting its equity. The non-convertible nature of these shares means they will not be converted into common stock in the future, preserving the current equity structure of the company.

The cumulative and redeemable features of these preference shares suggest that:

1. Dividends will accumulate if not paid in any year
2. The company has the option to buy back these shares in the future

Implications for Investors

These corporate actions may have several implications for KG Denim and its stakeholders:

1. Capital Structure: The deferment of warrant conversion and the issuance of preference shares indicate a strategic approach to capital management.
2. Investor Returns: The 6% dividend rate on the preference shares provides a fixed income opportunity for investors in these instruments.
3. Future Outlook: The company's decision to raise funds through preference shares rather than equity might suggest a focus on maintaining the current ownership structure while still securing additional capital.

The company has stated that this information will be made available on its official website at www.kgdenim.com for public reference.