Shah alloys Limited delivered a strong financial turnaround in the third quarter of FY26, reporting a net profit of Rs 35.22 crores compared to a loss of Rs 15.26 crores in the corresponding quarter of the previous year. The company's performance was significantly driven by exceptional gains from strategic asset disposals.

Financial Performance Overview

The company's quarterly results showed mixed operational trends with substantial one-time gains masking underlying challenges:

For the nine-month period ended December 31, 2025, the company reported a net profit of Rs 68.15 crores against a loss of Rs 7.93 crores in the corresponding period of FY25.

Major Asset Disposals Drive Exceptional Gains

The company's exceptional performance was primarily attributed to two significant transactions during the quarter:

Plant and Machinery Sale: Shah Alloys sold its plant and machinery, including capital work in progress, along with technical know-how and technology transfer for a consideration of Rs 6300.00 lakhs. This transaction generated a gain of Rs 5347.68 lakhs, which was recorded as an exceptional item.

Disinvestment in Associate: The company divested its stake in associate SAL Steel Limited through a share purchase agreement dated September 4, 2025. The realized gain from this disinvestment amounted to Rs 1398.41 lakhs, also treated as an exceptional item.

Plant Closure and Going Concern Issues

In a significant strategic decision, Shah Alloys announced the closure of its existing iron and steel plant in a board meeting dated July 21, 2025. The closure was necessitated by:

• Technology obsolescence
• Increasing higher production costs
• Persistent losses over the past couple of years
• Draining of company resources

The iron and steel plant situated at Village Santej, Taluka Kalol, District Gandhinagar, Gujarat, has been shut down since August 2025. The auditors have expressed uncertainty regarding the company's going concern status, though management is exploring various options in stakeholders' interests.

Operational Challenges and Qualified Audit Opinion

The company's financial results received a qualified audit opinion due to several accounting issues:

Revenue from operations declined dramatically to Rs 10.29 crores in Q3FY26 from Rs 51.90 crores in Q3FY25, reflecting the impact of plant closure and reduced business activities.

Earnings and Share Performance

Despite operational challenges, the company reported strong earnings per share metrics driven by exceptional gains:

• Basic EPS for Q3FY26: Rs 17.79 compared to loss of Rs 7.70 in Q3FY25
• Nine-month basic EPS: Rs 34.42 versus loss of Rs 4.00 in the previous year
• Paid-up equity share capital remained at Rs 1.98 crores

The company's total comprehensive income after adjusting for other comprehensive income stood at Rs 34.58 crores for the quarter, demonstrating the significant impact of asset monetization on overall financial performance.

Shah Alloys Limited has announced that its Board of Directors approved a One Time Settlement (OTS) with HDFC Bank for Rs 18 crore on January 27, 2026. The decision was made during a board meeting held from 4:30 PM to 6:45 PM IST and was disclosed under Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

Settlement Details

The One Time Settlement resolves a prolonged legal dispute between the company and HDFC Bank. According to the sanction letter dated January 27, 2026, Shah Alloys Limited has agreed to pay the following amount:

Background of Legal Dispute

The matter has been subject to extensive legal proceedings across multiple forums. The dispute timeline includes:

• Post-BIFR Court Order: The matter was initially handled following an order from the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) Court
• DRT Proceedings: The case has been pending before the Debt Recovery Tribunal since 2019
• NCLT Reference: The matter was also referred to the National Company Law Tribunal
• Resolution: After a long legal battle, both the company and bank agreed to the full and final One Time Settlement

Regulatory Compliance

The company has fulfilled its disclosure obligations by providing detailed parameters of the One Time Settlement as required under Point No. 10 of Para A of the SEBI Circular dated July 13, 2023. The disclosure includes both the reason for opting for OTS and a brief summary of the settlement terms.

The settlement represents a significant development for Shah Alloys Limited, bringing closure to legal proceedings that have been ongoing since 2019 and providing the company with a clear path forward regarding its obligations to HDFC Bank.