Sri Nachammai Cotton Mills Limited announced its unaudited financial results for Q3FY26 ended December 31, 2025, following board approval at a meeting held on February 12, 2026. The textile manufacturer reported continued operational challenges despite implementing cost-saving measures through renewable energy adoption.

Financial Performance Overview

The company's quarterly performance showed deterioration across key metrics, reflecting ongoing challenges in the yarn manufacturing sector.

Revenue from operations declined to ₹1,674.64 lakhs compared to ₹1,723.54 lakhs in the corresponding quarter of the previous year. Other income also reduced significantly to ₹4.89 lakhs from ₹26.63 lakhs.

Cost Management and Solar Power Benefits

Despite operational challenges, the company achieved notable cost reductions through strategic initiatives:

The significant reduction in power and fuel costs is primarily attributable to the captive use of electricity generated from the company's 4 MW solar power plant commissioned during FY2024-25.

Nine-Month Performance Highlights

For the nine-month period ended December 31, 2025, the company reported contrasting results:

The turnaround to profitability was largely due to an exceptional item of ₹658.88 lakhs related to preference share modification.

Preference Share Restructuring Impact

The exceptional item relates to the modification of redeemable preference shares originally issued to promoters in April 2012 for ₹15 crores with a 13-year maturity period. Following approval from preference shareholders in September and December 2024, the redemption period was extended by an additional 7 years. This modification resulted in derecognition of the existing liability and recognition of a new financial liability at present value of ₹8.41 crores, creating a one-time income of ₹6.58 crores.

Operational Strategy and Outlook

The textile manufacturer continues facing pressure from poor yarn demand and pricing disparities between cotton and yarn prices. Consequently, the company is currently operating only one unit for three shifts, with depreciation provided accordingly. The company continues implementing various cost-control and efficiency-enhancement measures across operations to reduce operational losses and improve efficiency.

Board Meeting and Audit Details

The Board of Directors approved these results at their meeting held on February 12, 2026, which commenced at 11:15 AM and concluded by 1:00 PM. The statutory auditors completed their limited review of the financial statements, with Gopalaiyer and Subramanian Chartered Accountants providing the independent auditor's review report.

Sri Nachammai Cotton Mills Limited has released its unaudited financial results for the quarter ended September 30, revealing a widened loss despite a one-time income from the extension of preference share redemption.

Financial Highlights

For the quarter ended September 30, Sri Nachammai Cotton Mills reported:

Despite the decrease in total income, the company reported a significant net loss for the quarter compared to a profit in the same period last year.

Preference Share Redemption Extension

A significant development during the quarter was the extension of the redemption period for preference shares:

• The company had issued redeemable preference shares worth ₹18 crores to promoters in April 2012, originally due for redemption by April 2025.
• Preference shareholders approved an extension of the redemption period by an additional 7 years through resolutions passed in September and December 2024.
• This modification resulted in derecognition of the existing financial liability and recognition of a new liability at a present value of ₹8.41 crores.
• The difference created a one-time income of ₹6.58 crores, recognized as an exceptional item.

Operational Updates

• Power and fuel costs decreased to ₹147.43 lakhs compared to ₹180.05 lakhs in the corresponding previous quarter.
• The reduction in power costs is attributed to the captive use of electricity generated from their solar power installations.
• The company has further installed an additional 1 MW solar plant during this quarter, bringing the total installation to 6.4 MW.

Market Conditions

The company noted poor demand for yarn with continued disparity in cotton prices compared to yarn prices. This challenging market environment has likely contributed to the company's financial performance.

Future Outlook

Sri Nachammai Cotton Mills is implementing various cost-control and efficiency-enhancement measures across operations to reduce operational losses and improve efficiency. The company continues to operate in the cotton and yarn manufacturing segment, with no separate reportable segments as per Ind AS 108.

The management remains focused on navigating the challenging market conditions while leveraging its investments in renewable energy to manage costs effectively.

The results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on November 11.