Sri Lakshmi Saraswathi Textiles (Arni) Limited announced its unaudited financial results for the third quarter and nine months ended 31st December 2025. The Chennai-based textile company reported operational challenges with declining revenues and continued losses, though showing some improvement compared to the previous year.

Financial Performance Overview

The company's financial performance for Q3FY26 reflected mixed results with reduced losses but declining revenues:

For the nine-month period ended 31st December 2025, the company showed improvement in loss reduction:

Expense Analysis

The company's expense structure for Q3FY26 showed variations across different categories. Cost of materials consumed stood at ₹1,281.01 lakhs compared to ₹1,868.01 lakhs in Q3FY25. Employee benefit expenses increased to ₹506.32 lakhs from ₹490.81 lakhs year-on-year. Finance costs decreased to ₹165.54 lakhs from ₹184.08 lakhs, while power and fuel expenses reduced to ₹409.27 lakhs from ₹460.91 lakhs in the corresponding quarter.

Asset Revaluation Exercise

A significant development during the quarter was the company's comprehensive asset revaluation exercise conducted by an independent registered valuer:

The revaluation resulted in Other Comprehensive Income of ₹19,962.02 lakhs (net of ₹8,805.72 lakhs deferred tax liability), significantly impacting the total comprehensive income for the quarter.

Auditor Concerns and Statutory Issues

The statutory auditors raised several concerns in their limited review report. They highlighted going concern uncertainty due to accumulated losses of ₹9,195.89 lakhs as of 31st March 2025 and continued negative net worth. The auditors also noted defaults in statutory dues including:

• Employees' Provident Fund: ₹124.23 lakhs (including interest and penalties)
• Employee State Insurance: ₹10.55 lakhs (including interest and penalties)
• Tax Deducted at Source: ₹12.59 lakhs (including interest)

Subsequent to the quarter end, the company remitted ₹9.19 lakhs towards PF and ₹2.03 lakhs towards ESI.

Management Response

The management expressed optimism about future performance, citing recent efforts to reduce cash losses and expecting benefits from government initiatives including FTAs with EU and USA, along with Budget 2026 provisions. The company assured that outstanding statutory dues would be cleared in the ensuing quarter and that the garments division, which recently started operations, would regularize statutory deductions from the current quarter onwards.

The Board of Directors approved these results in their meeting held on 12th February 2026, with the meeting commencing at 11:30 AM and concluding at 12:15 PM.

Sri Lakshmi Saraswathi Textiles (Arni) Limited , a textile manufacturer based in Chennai, has reported a net loss of Rs 707.33 crore for the first half of the fiscal year 2025-26, ending September 30, 2025. This loss marks an improvement from the Rs 1,146.62 crore loss reported in the same period last year.

Financial Performance

The company's financial results for the second quarter and half-year ended September 30, 2025, reveal several key points:

The total income from operations decreased marginally by 2.07% to Rs 458.88 crore in H1 2025-26 from Rs 468.59 crore in the corresponding period of the previous year.

Auditor's Concerns

The company's auditors, M/s. S. Viswanathan LLP, have raised significant concerns in their limited review report:

1. Accumulated Losses: The auditors highlighted that accumulated losses reached Rs 9,195.89 crore as of March 31, 2025.

2. Negative Net Worth: Due to consistent losses, the company's net worth remains negative as of September 30, 2025.

3. Going Concern Issues: The auditors expressed doubt about the company's ability to continue as a going concern, citing losses incurred over the past three years.

4. Statutory Dues: The report noted that Rs 106.71 crore towards Employee Provident Fund and Rs 6.05 crore towards Employee State Insurance have not been remitted to the appropriate authorities.

Management's Response

In response to the auditors' concerns, Sri Lakshmi Saraswathi Textiles' management has provided the following clarifications:

1. They have assured that the pending statutory dues, including provident fund and state insurance, will be remitted to the appropriate authorities in the coming period.

2. Despite the losses and eroded net worth, the company continues its business operations at an optimal level.

3. Management expressed confidence in future profitability, citing expected favorable changes in industrial conditions.

4. The company continues to prepare its financial statements on a going concern basis, reflecting their belief in future viability.

Looking Ahead

While the reduction in net loss compared to the previous year might be seen as a positive sign, the company's financial position remains challenging. The management's ability to turn around the company's performance and address the auditors' concerns will be crucial for Sri Lakshmi Saraswathi Textiles' future prospects.

Investors and stakeholders will likely keep a close watch on the company's efforts to improve its financial health, particularly its ability to generate profits and meet its statutory obligations in the coming quarters.