Sarla Performance Fibers delivered mixed Q3 results, showcasing strong net profit growth alongside declining EBITDA performance. The company demonstrated contrasting operational trends while navigating challenging market conditions.

Financial Performance Overview

The company's Q3 results reflected divergent trends across key financial metrics. While profitability at the net level showed remarkable improvement, operational profitability faced pressure during the quarter.

EBITDA Performance Decline

Sarla Performance Fibers experienced a significant decline in operational profitability with EBITDA falling to ₹166 million compared to ₹240 million in the same quarter of the previous year. The EBITDA margin compressed substantially to 18.67% from 24.00%, indicating operational challenges despite overall profitability improvements.

Net Profit Surge

Despite EBITDA pressures, the company achieved remarkable net profit growth of 62.03% to ₹192 million compared to ₹118.5 million in the corresponding quarter last year. This substantial bottom-line improvement suggests effective management of non-operational expenses and financial optimization.

Revenue and Margin Dynamics

The company faced revenue headwinds with Q3 revenue declining 11.31% to ₹886 million from ₹999 million year-over-year. The combination of lower revenue and reduced EBITDA margins reflects challenging operational conditions, though the company maintained strong net profitability through effective cost management strategies.

Sarla Performance Fibers Limited has disclosed receiving a rectification order from the income tax department that has resulted in a significant tax demand. The company informed stock exchanges about this development under regulatory disclosure requirements on January 13, 2026.

Tax Authority Action Details

The Deputy Commissioner of Income-tax, Circle 3(3)(1), Mumbai, issued a rectification order under Section 154 of the Income-tax Act, 1961, for assessment year 2018-19. The order was dated January 07, 2026, and the company received email intimation on January 13, 2026.

Financial Impact and Revised Assessment

The rectification order has revised the company's total income for the assessment year to ₹50,22,01,570.00. This revision stems from correcting a mistake in the previous assessment where an adjustment of ₹13,09,400.00 was not incorporated.

Company's Response and Legal Action

Sarla Performance Fibers Limited has taken proactive legal action in response to the tax demand. The company has already filed an appeal before the Hon'ble Income Tax Appellate Tribunal (ITAT), Mumbai. The appeal is currently pending before the tribunal.

The company has clarified that this rectification order addresses a mistake apparent from the record in the previous assessment rather than any violation or contravention. Management has stated that there is no impact on the company's operations despite the financial demand.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 read with Para A (20) of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/2024/152 dated November 11, 2024. The company secretary and compliance officer Mustafa Manasawala signed the disclosure document.