Active Clothing Co Limited, a prominent player in the clothing industry, has recently found itself in the spotlight of regulatory scrutiny. The company has disclosed that it received a Goods and Services Tax (GST) show cause notice from the Joint Commissioner CGST (Audit), Ludhiana, covering the audit period from 2019-20 to 2023-24.

Details of the Notice

According to the company's disclosure, the show cause notice, numbered 216/GST/2025-26/JC and dated September 26, 2025, involves a significant sum:

Company's Response

Active Clothing Co has taken a proactive approach in addressing this regulatory challenge:

1. High Court Petition: The company has approached the jurisdictional High Court to quash the notice.
2. Consultation: Active Clothing Co is currently consulting with tax and legal advisors to ensure accurate reporting and an appropriate response.
3. Impact Assessment: The company expects no material financial or operational impact from this notice at this stage.

Transparency Measures

In line with good governance practices and regulatory requirements, Active Clothing Co has made this disclosure voluntarily. This action aligns with the recent amendments to SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, specifically the changes introduced by SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023.

Outlook

While the adjudication is pending, Active Clothing Co maintains that the show cause notice was issued without providing the company reasonable time to be heard. The company's board took note of this notice on November 14, 2025.

As the situation unfolds, stakeholders will be keenly watching how Active Clothing Co navigates this regulatory challenge and its potential implications on the company's operations and financial standing.

Active Clothing Co , a leading integrated design-to-shelf apparel manufacturing platform, has reported a strong performance for the first half of fiscal year 2026, with significant expansion plans underway.

Financial Highlights

The company announced robust financial results for H1 FY2026:

The company's operating cash flow improved to Rs. 8.16 Crores, driven by disciplined working capital management and continued focus on operational efficiencies.

Strategic Partnership and Expansion

Active Clothing has entered into a long-term partnership with Ningbo Shipping Company Limited, the world's largest manufacturer of computerized flat knitting machines. This collaboration aims to create India's first knit-to-shape smart knitting factory:

• Addition of 600 advanced knitting machines over three years
• Total project cost estimated between Rs. 150-200 Crores
• Machinery supplier to provide financing with a five-year deferred payment plan
• Expected to enhance capability and scale, particularly in the sweater vertical

Operational Updates

• The company currently supplies to 38 countries
• Ongoing Rs. 60 Crores expansion project, expected to be operational in two months
• Exploring new markets, particularly in Europe, to diversify from the American market
• Implementation of 3D designing and virtual sampling processes to shorten turnaround times

Market Challenges and Outlook

Active Clothing faces challenges from disruptions in the American market, which have affected the apparel industry. However, the company remains optimistic about its growth prospects:

• Targeting new clients and increased business with existing customers post-expansion
• In talks with potential new customers like Primark and Marks & Spencer
• Focus on automation, sustainability, and reduced wastage in manufacturing processes

Management Commentary

Rajesh Mehra, Managing Director of Active Clothing Company Limited, stated, "Our investments in technology, efficiency, and product development continue to reinforce our long-term platform for growth. As we move ahead, our focus remains on strengthening design-to-shelf capabilities, scaling smart manufacturing, expanding product categories, and deepening partnerships with leading global brands."

The company's strategic initiatives and robust financial performance position it well for future growth in the dynamic apparel manufacturing sector. Investors and stakeholders will be watching closely as Active Clothing continues to expand its capabilities and market reach.