Loyal Textile Mills narrows loss as asset sales support

Loyal Textile Mills Limited, referred to as Loyal Textile Mills, reported a Rs 0.97 crore total loss for the quarter ended September 30, 2026, against a Rs 9.66 crore loss a year earlier, as exceptional items of Rs 3.36 crore partly offset a Rs 4.04 crore pre-exceptional loss while revenue declined to Rs 90.57 crore.

Why did Loyal Textile Mills' September-quarter loss narrow?

Loyal Textile Mills' total loss after tax narrowed to Rs 0.97 crore in the quarter ended September 30, 2026, from Rs 9.66 crore in the corresponding 2025 quarter. Loss before exceptional items and tax reduced to Rs 4.04 crore from Rs 7.91 crore, while exceptional items rose to Rs 3.36 crore from Rs 0.51 crore, leaving a pre-tax loss of Rs 0.68 crore compared with Rs 7.40 crore.

The reported improvement included changes in both continuing and discontinued operations. Continuing operations recorded a Rs 0.35 crore loss after tax, compared with Rs 3.47 crore a year earlier, while discontinued operations reported a Rs 0.63 crore loss against Rs 6.19 crore. Total comprehensive loss was Rs 0.89 crore, down from Rs 8.80 crore in the September 2025 quarter.

For the half year ended September 30, 2026, Loyal Textile Mills reported a total loss after tax of Rs 4.31 crore, compared with Rs 34.79 crore in the prior-year half. The loss before exceptional items and tax narrowed to Rs 9.44 crore from Rs 35.89 crore, while exceptional items were Rs 5.70 crore compared with Rs 5.09 crore.

Did Loyal Textile Mills' revenue improve in the September quarter?

No. Loyal Textile Mills' revenue from operations fell to Rs 90.57 crore in the September 2026 quarter from Rs 105.87 crore a year earlier, although it increased from Rs 86.06 crore in the June 2026 quarter. Total income, including other income of Rs 3.49 crore, was Rs 94.16 crore, compared with Rs 114.29 crore in September 2025 and Rs 90.81 crore in June 2026.

First-half revenue also decreased, to Rs 176.73 crore for the half year ended September 30, 2026 from Rs 235.98 crore in the prior-year period. Other income fell to Rs 8.23 crore from Rs 9.49 crore, taking total income to Rs 184.97 crore from Rs 245.47 crore. Loyal Textile Mills identifies textiles and garments manufacturing as its sole reportable operating segment under Indian Accounting Standard 108.

Expenses fell in aggregate despite higher material consumption. September-quarter materials consumed rose to Rs 54.30 crore from Rs 21.23 crore, but employee-benefit expense declined to Rs 18.19 crore from Rs 22.78 crore, finance costs fell to Rs 5.23 crore from Rs 8.68 crore, and other expenses reduced to Rs 26.74 crore from Rs 30.98 crore. Total expenses were Rs 98.20 crore, compared with Rs 122.20 crore a year earlier.

For the first half, employee-benefit expense fell to Rs 37.14 crore from Rs 47.79 crore, finance costs declined to Rs 10.24 crore from Rs 18.47 crore, and other expenses reduced to Rs 47.66 crore from Rs 66.79 crore. Materials consumed increased to Rs 93.06 crore from Rs 77.11 crore, while total expenses dropped to Rs 194.40 crore from Rs 281.37 crore.

How much did asset sales contribute to Loyal Textile Mills' results?

Asset sales contributed Rs 5.70 crore of profit in the current year through the disposal of idle plant and machinery identified as surplus to operating requirements, according to the notes to the September 2026 results. That amount broadly corresponds with the Rs 5.70 crore of exceptional items reported for the half year, while exceptional items in the September quarter were Rs 3.36 crore.

The comparable prior-year exceptional items were more varied. Loyal Textile Mills disclosed Rs 33.82 crore of profit from sales of land, windmills and idle plant and machinery, alongside a Rs 36.47 crore inventory impairment linked to tariff-related demand uncertainty and geopolitical developments. It also recorded a Rs 1.07 crore gratuity obligation arising from a revised actuarial computation under the New Labour Code, resulting in a Rs 3.72 crore net exceptional loss for the year ended March 31, 2026.

The cash-flow statement, labelled by the filing as for the year ended September 30, 2026, shows Rs 6.28 crore of proceeds from fixed-asset sales. It reported Rs 18.64 crore of cash flow from operating activities, Rs 12.51 crore from investing activities and Rs 18.35 crore used in financing activities; closing cash and cash equivalents were Rs 13.32 crore, compared with Rs 0.52 crore at the opening.

Loyal Textile Mills had Rs 14.58 crore of non-current assets classified as held for sale at September 30, 2026, unchanged from March 31, 2026. Management said it had identified further underutilised and non-core assets for monetisation to reduce debt, strengthen liquidity and improve cost efficiency, but the filing gives no sale date or expected proceeds.

What liquidity and operating issues did the auditor highlight?

The statutory auditor's November 12, 2026 limited-review report highlighted continuing operating losses, suboptimal production-capacity utilisation and market conditions affecting liquidity. The auditor said Loyal Textile Mills' ability to achieve operational profits is completely dependent on implementation of management's initiatives, while leaving its review conclusion unmodified.

Management said it is realigning and rationalising manufacturing operations, prioritising high-value contribution segments, improving capacity utilisation and optimising costs. Management stated that it was confident of achieving sustainable operational profitability in the near future, but the September quarter still produced a Rs 4.04 crore loss before exceptional items and tax.

Total borrowings were Rs 207.49 crore at September 30, 2026, comprising Rs 171.18 crore of current borrowings and Rs 36.31 crore of non-current borrowings. At March 31, 2026, the balance sheet showed Rs 215.60 crore of current borrowings and no non-current borrowings. Total equity declined to Rs 164.32 crore from Rs 168.42 crore.

Working-capital movements were mixed at September 30, 2026. Inventories increased to Rs 110.40 crore from Rs 105.21 crore at March 31, while trade receivables fell to Rs 59.91 crore from Rs 63.73 crore. Current liabilities decreased to Rs 286.42 crore from Rs 319.46 crore, although dues to micro and small enterprises increased to Rs 16.66 crore from Rs 11.04 crore.

Conclusion

Loyal Textile Mills reduced its September-quarter loss as lower employee, finance and other expenses narrowed the pre-exceptional loss, but revenue declined both year on year and in the first half. The Rs 5.70 crore current-year profit on the disposal of surplus machinery was a significant component of the half-year exceptional items.

The next results will indicate whether management's plan to focus on high-value segments, lift capacity utilisation and optimise costs can produce operational profitability before exceptional items. The disclosed monetisation of further assets, including Rs 14.58 crore classified as held for sale, and its effect on Rs 207.49 crore of borrowings remain key matters to watch.