Bombay Dyeing and Manufacturing Company Limited has announced a significant development in its ongoing GST dispute, with the appeals authority partially allowing the company's challenge against a tax demand order for FY 2019-20. The Joint Commissioner (Appeals) passed the order on February 24, 2026, resulting in a substantial reduction of the company's GST liability.

GST Demand Reduction Details

The company had originally received a GST demand order in Form GST DRC-07 for FY 2019-20, which resulted in a total demand of Rs. 188.84 crore including interest and penalty. Following the appeal adjudication, the revised liability has been significantly reduced.

Appeal Timeline and Process

Bombay Dyeing had filed the appeal against the original demand order within the prescribed timeline before the Joint Commissioner (Appeals). The company's previous disclosure regarding the receipt of the GST DRC-07 order was made on August 30, 2024. The appeal process has now been completed with the order being passed on February 24, 2026.

Company's Next Steps

Following the partial allowance of the appeal, Bombay Dyeing has indicated that it will evaluate further legal recourse options in the matter. The company has not specified the exact nature of the additional legal steps it may pursue, but this suggests the possibility of challenging the remaining liability through higher appellate forums.

Regulatory Compliance

The disclosure has been made under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, ensuring transparency with stakeholders regarding material developments affecting the company's financial position. The communication was signed by Company Secretary Sanjive Arora and addressed to both BSE Limited and National Stock Exchange of India Ltd.

Bombay Dyeing has received a credit rating outlook revision from CRISIL Ratings Limited on January 2, with the agency changing its outlook to 'Stable' from 'Positive' while maintaining the existing rating levels. The rating action affects the company's total bank loan facilities of ₹501.00 crores and fixed deposits of ₹0.30 crores.

Rating Action Details

CRISIL Ratings has taken the following rating actions for Bombay Dyeing:

Rationale for Outlook Revision

The revision in outlook reflects the moderation in polyester staple fibre (PSF) segment's operating profitability in H1 of fiscal 2026. This decline is primarily attributed to lower sales from the higher margin export market, particularly to the USA. The company's export business reduced from 34.00% to 16.00% in H1 fiscal 2026 due to US tariffs, which has impacted margins significantly.

While the company is focusing on improvement in operating margins through cost efficiency measures to save power costs and improve realizations through value addition, the increase in export business will be critical for profitability improvement. Sustenance of scale and improvement of margins from the PSF segment will remain key monitoring factors.

Financial Strength and Liquidity

Despite the operational challenges, Bombay Dyeing maintains a strong financial profile with several key strengths:

The company received proceeds from the sale of its land parcel at Worli in fiscal 2024, totaling approximately ₹4,686.00 crores in the first tranche (October 2023) and ₹538.00 crores in the second tranche (August 2024). This transaction significantly strengthened the company's financial position.

Business Diversification and Market Position

Bombay Dyeing operates through three main business divisions: real estate, polyester staple fibre manufacturing, and retail. The company holds a significant market share of more than 10.00% in the PSF segment, catering to diverse industries including apparel, home textiles, automobiles, geotextiles, hygiene products, and industrial products.

The real estate division has a healthy track record with completed projects including the Island City Centre (ICC) residential project and WIC Worli - Axis Bank HQ. The company plans to launch fresh real estate projects in Q4 FY 2026, with customer bookings and response being closely monitored.

Rating Sensitivity and Market Performance

CRISIL Ratings has identified several factors that could influence future rating actions. Upward factors include improvement in operating profitability above 2.00% in the PSF segment, timely launch of new projects with adequate customer bookings, and sustenance of financial risk profile. Downward factors include continued operating losses from the PSF segment and low cash flow from operations due to subdued response to upcoming projects.

On January 2, shares of Bombay Dyeing ended at ₹129.50, down by ₹2.76, or 2.09%. The company faces ongoing legal challenges, including a SEBI fine of ₹2.25 crores and market ban, currently under appeal at SAT. Additionally, there are unacknowledged GST and other claims of approximately ₹889.00 crores under legal appeal.