Gokak Textiles Q2 profit follows Rs 8.70 crore IREDA waiver

Gokak Textiles Limited reported a standalone profit of Rs 73.68 lakh for the quarter ended September 30, 2026, after reversing Rs 8.70 crore of charges waived by Indian Renewable Energy Development Agency Limited. The reversal reduced finance costs, but Gokak Textiles still recorded a Rs 3.28 crore loss for the half year and reported negative net worth.

How did Gokak Textiles return to profit in Q2?

Gokak Textiles returned to a standalone Q2 profit because its finance costs included reversal of Rs 8.70 crore in previously accrued lender charges. Indian Renewable Energy Development Agency Limited, or IREDA, had levied the charges between February 2025 and August 2026 because of a shortfall in the required Debt Service Reserve Account, or DSRA, balance. Gokak Textiles reversed the accrued charges after receiving IREDA’s waiver.

Finance costs were negative Rs 90.57 lakh in the September 2026 quarter, compared with Rs 7.43 crore in the June 2026 quarter and Rs 8.90 crore a year earlier. The movement helped change a Rs 5.12 crore pre-tax loss in the preceding quarter into a Rs 73.68 lakh pre-tax profit. As no tax expense was reported, net profit was also Rs 73.68 lakh and earnings per share were Rs 1.13, against a loss per share of Rs 6.17 in the June quarter.

The waiver did not complete all DSRA obligations. As of the November 13, 2026 results announcement, Gokak Textiles said it was still fulfilling the remaining DSRA requirements. The June 2026 quarter also contained Rs 1.11 crore of exceptional income from the final insurance settlement for fire and lightning incidents during January to August 2025, whereas no exceptional item was reported for the September quarter.

What changed in Gokak Textiles revenue and segments?

Gokak Textiles’ revenue from operations rose to Rs 22.22 crore in the September quarter from Rs 15.73 crore a year earlier, but fell from Rs 24.31 crore in the June quarter. Total income, including Rs 1.15 crore of other income, was Rs 23.37 crore, compared with Rs 16.81 crore in the prior-year quarter and Rs 25.37 crore in the prior quarter.

The Power segment reported revenue of Rs 11.23 crore, more than double Rs 5.33 crore a year earlier, while Textile revenue increased to Rs 12.52 crore from Rs 12.06 crore. Power reported a Rs 7.97 crore segment profit before tax, reversing a Rs 9.27 crore loss in the prior-year quarter. Textile reported a Rs 7.23 crore segment loss before tax, wider than the Rs 5.31 crore loss a year earlier.

Gokak Textiles said power generation is largely weather-dependent and seasonal, making quarter-to-quarter Power results not directly comparable. For the half year ended September 30, 2026, Power revenue rose to Rs 25.87 crore from Rs 12.45 crore, while Textile revenue increased to Rs 25.43 crore from Rs 22.58 crore. The Textile segment’s half-year loss nevertheless widened to Rs 13.78 crore from Rs 12.40 crore.

Why did Gokak Textiles remain loss-making for the half year?

Gokak Textiles remained loss-making for the half year because a Rs 13.78 crore Textile segment loss exceeded the Rs 10.50 crore Power segment profit. The standalone net loss was Rs 3.28 crore for the six months ended September 30, 2026, narrowing from Rs 26.04 crore in the corresponding 2025 period. Revenue from operations increased to Rs 46.54 crore from Rs 31.10 crore.

Half-year finance costs fell to Rs 6.52 crore from Rs 17.59 crore, reflecting the IREDA charge reversal, while depreciation and amortisation declined slightly to Rs 9.23 crore from Rs 9.45 crore. Employee-benefit expense rose to Rs 14.49 crore from Rs 12.50 crore, and material-consumption cost rose to Rs 14.60 crore from Rs 11.12 crore. Total expenses declined to Rs 53.12 crore from Rs 60.02 crore.

Operating cash flow was an inflow of Rs 11.66 crore in the half year, compared with an outflow of Rs 1.63 crore a year earlier. Financing activities used Rs 12.03 crore, including Rs 11.47 crore in finance costs paid and Rs 8.96 crore in borrowing repayments. Cash and cash equivalents ended September 2026 at Rs 3.91 crore, down from Rs 4.44 crore at March 31, 2026.

What does Gokak Textiles’ balance sheet show about liquidity?

Gokak Textiles reported current liabilities exceeding current assets by Rs 41.51 crore at September 30, 2026. Current assets stood at Rs 28.39 crore, while current liabilities were Rs 69.90 crore. The company also disclosed accumulated losses of Rs 268.05 crore and negative net worth at the reporting date.

Total equity was negative Rs 15.67 crore at September 30, improving from negative Rs 24.31 crore at March 31, 2026. Instruments entirely equity in nature rose to Rs 181.84 crore from Rs 169.93 crore. During the half year, Gokak Textiles received Rs 8.41 crore in perpetual loans from Shapoorji Pallonji And Company Private Limited and its group companies, while Rs 3.50 crore of borrowings was converted into perpetual loans.

The statutory auditors highlighted the half-year loss, current-liability shortfall, accumulated losses, negative net worth, reduced Textile operations and financial stress as creating material uncertainty over Gokak Textiles’ ability to continue as a going concern. Their review conclusion was unmodified. Gokak Textiles prepared the accounts on a going-concern basis, citing past and committed financial and operational support from Shapoorji Pallonji And Company Private Limited.

What is happening with Gokak Textiles’ Knitwear Unit?

Gokak Textiles said its Belagavi Knitwear Unit was deemed permanently closed from October 6, 2026. The company had signed an agreement on September 9, 2025 to sell the unit for Rs 19.50 crore and had received a Rs 9.50 crore advance. Its board approved permanent closure on August 11, 2026.

The deemed approval followed expiry of the statutory period for a state-government decision on the closure application without communication. Gokak Textiles said it had paid applicable statutory and admissible employee dues, including closure compensation and gratuity, but employees disputed the settlement. It has initiated an injunction petition before the additional Sessions court in Belagavi to resolve the matter.

Gokak Textiles said the Knitwear Unit’s activities were not material to the overall Textile division and would be undertaken from its Mills division. Assets classified as held for sale were Rs 6.37 crore at September 30, 2026, compared with Rs 5.46 crore at March 31, 2026. The employee dispute and the legal process mean completion of the closure remains unresolved.

Conclusion

Gokak Textiles’ Rs 73.68 lakh Q2 profit was materially supported by the Rs 8.70 crore IREDA waiver and reversal of DSRA-related charges. Higher Power revenue and a swing to Power segment profit also improved the quarterly outcome, but the half year remained loss-making as the Textile segment recorded a Rs 13.78 crore loss and liquidity pressure persisted.

Next, Gokak Textiles’ progress in meeting remaining DSRA requirements is a disclosed item to watch, alongside continued support from Shapoorji Pallonji And Company Private Limited and the court process over the Knitwear Unit closure. Management has also said the earlier merger of Suryoday One Energy Private Limited and reserve restructuring, effected in financial year 2023-24, is expected to improve its financial position over time.