Kothari Industrial reports Rs 55.69 crore half-year loss

Kothari Industrial Corporation Limited reported a consolidated pre-tax loss of Rs 55.69 crore for the half-year ended September 30, 2026, after recognising a Rs 25.86 crore share of loss from its 30%-owned associate, Phoenix Kothari Footwear Private Limited. The loss widened from Rs 8.64 crore in the corresponding half-year despite total income rising to Rs 111.11 crore.

Why did Kothari Industrial report a Rs 55.69 crore loss?

Kothari Industrial reported the Rs 55.69 crore consolidated pre-tax loss after recording Rs 25.86 crore as its share of Phoenix Kothari Footwear’s loss for the six months ended September 30, 2026. Before this equity-accounted associate loss, the group’s loss before tax was Rs 29.84 crore, according to the consolidated statement of profit and loss.

The associate loss represented about 46% of the group’s reported pre-tax loss for the half-year. In the corresponding six months ended September 30, 2025, Kothari Industrial reported a consolidated pre-tax loss of Rs 8.64 crore, meaning the loss increased by Rs 47.05 crore year on year.

The September 2026 quarter accounted for Rs 26.84 crore of the half-year pre-tax loss, including a Rs 13.23 crore associate-loss share. This was lower than the Rs 28.85 crore pre-tax loss in the June 2026 quarter, although the associate-loss share increased from Rs 12.63 crore in June by Rs 59.04 lakh.

How did Kothari Industrial’s income and cash flow change?

Kothari Industrial reported total income of Rs 111.11 crore for the half-year ended September 30, 2026, compared with Rs 49.67 crore in the year-earlier period. The Rs 61.44 crore increase did not prevent a wider loss, as the group reported Rs 55.69 crore of loss before tax after expenses and the associate-loss charge.

Finance costs rose to Rs 8.24 crore in the latest half-year from Rs 32.56 lakh a year earlier. The filing also shows the group’s loss before the associate result at Rs 29.84 crore, compared with Rs 8.12 crore before the comparable-period associate result and tax effects shown in the consolidated statement.

Net cash from operating activities declined to Rs 25.77 crore for the half-year from Rs 49.44 crore a year earlier. Kothari Industrial generated Rs 26.15 crore from operations before direct taxes, while working-capital movements included a Rs 10.99 crore increase in trade payables and a Rs 4.27 crore increase in trade receivables.

What is Kothari Industrial’s exposure to Phoenix Kothari Footwear?

Kothari Industrial holds a 30% interest in Phoenix Kothari Footwear, which it accounts for as an associate under the equity method. Under this approach, Kothari Industrial records its share of the associate’s profit or loss in consolidated earnings rather than consolidating the associate’s revenue, assets and liabilities line by line.

The Rs 25.86 crore half-year loss share comprised Rs 12.63 crore in the June 2026 quarter and Rs 13.23 crore in the September 2026 quarter. Kothari Industrial also recognised Rs 2.36 lakh as its share of the associate’s other comprehensive income for the six months ended September 30, 2026.

The consolidated notes state that Rs 37 crore was paid to Phoenix Kothari Footwear during the period, although the supplied filing text does not fully specify the accounting description of that payment. Kothari Industrial’s board also approved a postal-ballot proposal for further investment in Phoenix Kothari Footwear as a material related-party transaction on November 14, 2026.

What funding plans and lease advances did Kothari Industrial disclose?

Kothari Industrial said its results were prepared on a going-concern basis despite losses during the quarter and half-year ended September 30, 2026. Management said it has a business-expansion plan with additional financing and believes it has adequate financial resources to continue operations for the foreseeable future.

On November 14, 2026, the board approved issuing a postal-ballot notice to seek shareholder approval to increase the borrowing limit from Rs 500 crore to Rs 1,000 crore. The proposed resolutions also seek to increase the limit for investments, loans, guarantees and securities from Rs 500 crore to Rs 1,000 crore.

The board also proposed borrowing up to Rs 200 crore from Managing Director and promoter J. Rafiq Ahmed at 12% annual interest, subject to shareholder approval as a material related-party transaction. The proposal includes an option to convert the outstanding loan into equity shares at a future date.

Kothari Industrial had paid Rs 32.14 crore to SIPCOT for land at Melur, Tamil Nadu, for a footwear factory as of September 30, 2026. As the lease agreement had not been executed, the amount remained a capital advance and no right-of-use asset or lease liability was recognised under Indian Accounting Standard 116.

What did Kothari Industrial’s auditors flag?

Kothari Industrial’s statutory auditors conducted a limited review of the September 2026 standalone and consolidated results rather than an audit. They said external confirmations were not provided for promoter balances of Rs 1.81 crore and unsecured borrowings of Rs 94.33 crore, preventing them from ascertaining any consequential effect on profit and loss.

The auditors said reconciliations of prior-year Goods and Services Tax input-tax-credit balances with returns and portal records remained unresolved at September 30, 2026. They noted that balances for the half-year ended September 30, 2026 had been reconciled, but said they could not determine the correctness or potential effect of prior-period balances.

The review reports also said prior-year reconciliation of salary payable and related statutory deductions remained unresolved. In addition, no provision had been made for inventory aged more than 365 days, so the auditors could not comment on whether those inventories should be carried at cost or net realisable value.

Kothari Industrial separately disclosed that proceedings over certain Coonoor plots earmarked for public use remained pending before the Madras High Court. The company said it had challenged the Nilgiris Collector’s repossession proceedings through a writ petition and that an interim stay order had been passed.

Conclusion

Kothari Industrial’s half-year results show that higher total income of Rs 111.11 crore was outweighed by operating costs, finance costs of Rs 8.24 crore and a Rs 25.86 crore equity-accounted loss from Phoenix Kothari Footwear. The group’s consolidated pre-tax loss increased to Rs 55.69 crore, while cash and cash equivalents closed at Rs 3.24 crore on September 30, 2026.

The next disclosed milestones are the postal-ballot process for the proposed Rs 1,000 crore borrowing and investment limits, the proposed Rs 200 crore promoter loan at 12% interest, and the proposed further investment in Phoenix Kothari Footwear. Kothari Industrial’s later filings may also show whether the Melur lease is executed and whether the unresolved audit-review matters are addressed.