Rajapalayam Mills Limited has received significant GST demand orders totaling Rs. 23.70 crores from the State Tax Officer under the Intelligence Wing of the Goods and Services Tax Department. The company disclosed this development through a regulatory filing under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

GST Demand Details

The demand orders were issued by Mr. Lakshmanan Kumaresan, Commercial Tax Officer – State Tax Officer (Inspection – 4), Intelligence Wing, under Section 74 of TNGST/CGST Act, 2017. Both orders were received on February 12, 2026, covering two consecutive financial years.

Nature of Violations

The GST demand orders cover multiple areas of alleged tax violations and contraventions:

FY 2020-21 Violations

• Tax due on ITC Reversal for Credit Note issued
• Interest due on belated payment of Creditors
• Tax due on Corporate Guarantee
• Tax due for Addition/Deletion to fixed assets
• Tax due on Rent paid
• Tax due on Other Selling Expenses

FY 2021-22 Violations

The violations for FY 2021-22 mirror those of the previous year, including:

• ITC reversal issues related to credit notes
• Belated payment interest on creditors
• Corporate guarantee tax implications
• Fixed asset addition/deletion tax matters
• Rent payment tax issues
• Other selling expenses tax dues

Company's Response and Financial Impact

The company has conducted a preliminary assessment of the demand orders and believes it has a strong case on merits. Management has expressed confidence in achieving a favorable outcome when the matter reaches the appellate stage. This suggests the company intends to challenge the GST demands through the appropriate legal channels.

Regulatory Compliance

The disclosure was made in compliance with SEBI (LODR) Regulations, 2015, read with SEBI Master Circular no. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, and Industry Standards note on Regulation 30 of SEBI LODR Regulations. The company has provided comprehensive details as required under the regulatory framework, ensuring transparency with stakeholders regarding this significant financial development.

Rajapalayam Mills Limited announced its Q3FY26 financial results for the quarter ended December 31, 2025, presenting a mixed performance with contrasting outcomes between standalone and consolidated operations. The textile manufacturer's board approved the unaudited financial results during their meeting held on February 12, 2026.

Standalone Financial Performance

The company's standalone operations faced challenges during Q3FY26, reporting a net loss despite maintaining steady revenue levels. The financial metrics reflect operational pressures across various expense categories.

Expense Analysis and Operational Metrics

The company's expense structure showed mixed trends across different categories. Total expenses increased to ₹25,771.81 lakhs in Q3FY26 compared to ₹24,225.38 lakhs in the previous quarter. Notable changes included a significant increase in power and fuel costs to ₹2,110.48 lakhs from ₹415.09 lakhs in Q2FY26.

Key Expense Components (Q3FY26):

• Cost of materials consumed: ₹11,122.49 lakhs
• Employee benefits expenses: ₹3,214.94 lakhs
• Finance costs: ₹2,322.00 lakhs
• Depreciation and amortization: ₹1,901.54 lakhs

Consolidated Results Show Strong Performance

In stark contrast to standalone performance, the consolidated results demonstrated robust profitability, primarily driven by contributions from associate companies.

Nine-Month Performance Overview

For the nine-month period ended December 31, 2025, the company showed improved performance compared to the corresponding period last year. Standalone operations reported a net loss of ₹1,168.16 lakhs compared to ₹3,653.51 lakhs in the previous year, indicating significant improvement in operational efficiency.

The consolidated nine-month results were particularly strong, with net profit reaching ₹8,475.30 lakhs compared to ₹2,168.83 lakhs in the corresponding period last year. The consolidated earnings per share for nine months stood at ₹92.08 compared to ₹23.56 in the previous year.

Segment Performance and Business Operations

The company operates primarily in two segments: textiles and wind mills. The textile segment generated revenue of ₹24,267.62 lakhs in Q3FY26, while the wind mills segment contributed ₹585.53 lakhs. The textile segment showed a profit before finance cost and tax of ₹990.79 lakhs, while wind mills contributed ₹136.42 lakhs.

Financial Position and Exceptional Items

The company's net worth stood at ₹41,943.36 lakhs for the nine-month period. Exceptional items during Q3FY26 included a profit of ₹54.34 lakhs from the sale of property, plant, and equipment. The company also reported other comprehensive income of ₹99.86 lakhs, primarily from remeasurement gains on defined benefit obligations.

The financial results were reviewed by the audit committee and approved by the board of directors, with statutory auditors providing an unmodified opinion on the limited review conducted.