PBM Polytex retains Eurotex going-concern basis after closure

PBM Polytex Limited retained a going-concern basis for associate Eurotex Industries and Exports Limited in consolidated results for September 30, 2026, although Eurotex’s entire net worth was eroded and its Kolhapur plants had ceased operations on March 25, 2019 before formal closure notices in March 2022. Management cites settled lender-bank dues and prospective land development.

What happened to Eurotex’s Kolhapur manufacturing plants?

Eurotex’s Kolhapur manufacturing operations stopped on March 25, 2019, and its board decided on March 26, 2022 to close the plants. PBM Polytex said the shutdown arose from what Eurotex described as persistent, unfair and illegal labour activities, together with a disconnection of power. The manufacturing sites had therefore been at a standstill for more than three years when the board approved closure.

Eurotex sent notices of closure to concerned workers and authorities on March 30, 2022 under the Industrial Disputes Act, 1947. The filing distinguishes between the March 25, 2019 operational halt and the March 30, 2022 closure notice, meaning that production had stopped well before the formal legal closure process was notified.

PBM Polytex’s September 30, 2026 filing does not disclose a production restart date, output volume or fresh manufacturing plan for the Kolhapur facilities. Instead, it identifies further development of Eurotex’s available land, yarn trading and other activities permitted by its memorandum of association as possible future routes. The disclosed approach has therefore shifted from the closed manufacturing plants to prospective alternative activity.

Why is Eurotex still treated as a going concern?

Eurotex is treated as a going concern because its management expects assets to be realised and liabilities to be settled in the normal course of business, despite the entire erosion of net worth. PBM Polytex said Eurotex had settled lender-bank dues by borrowing from promoter-group companies, which is a stated part of management’s basis for preparing its financial statements on that assumption.

Management’s stated basis does not include reopening the Kolhapur plants closed through notices dated March 30, 2022. It includes proposed further development of Eurotex’s available land area in the near future, yarn trading, or another business activity allowed under its object clauses. The September 30, 2026 disclosure gives no project timetable, expected land-development proceeds, cost estimate, trading start date or revenue target.

The company’s own reportable business segment is manufacturing of cotton yarn under Indian Accounting Standard 108, or Ind AS 108, Operating Segments. Eurotex, however, is disclosed as an associate in the consolidated results and its going-concern support is tied to land development, yarn trading or another permitted activity rather than a reported resumption of cotton-yarn manufacturing.

What labour matter remains pending for Eurotex?

A writ petition over workers’ lay-off dues remained pending before the Hon’ble High Court, Mumbai when PBM Polytex approved its September 30, 2026 results on November 14, 2026. The filing says the Supreme Court disposed of the matter by stating that the remedy should be sought before the High Court, after which Eurotex filed the writ petition.

PBM Polytex said Eurotex had taken expert legal advice on the matter, but did not disclose the disputed value of lay-off dues, an expected hearing date or an expected financial outcome. The pending litigation therefore remains an unresolved matter alongside the March 2019 operational halt and the 2022 plant closure process.

The filing does not state that the labour case has been settled or that a liability amount has been quantified in the disclosure. Eurotex’s stated plan for further land development and possible yarn trading is separate from the High Court proceeding, and the filing provides no date by which either the litigation or any alternative business activity will be resolved.

How did the auditor address Eurotex’s going-concern basis?

Mahendra N. Shah & Co. drew attention to Eurotex’s going-concern basis in its review report dated November 14, 2026, but did not modify its conclusion on that matter. The auditor specifically referred to fully eroded net worth, manufacturing operations discontinued since March 25, 2019, and the closure announcement of March 30, 2022.

The auditor said Eurotex’s financial statements contemplate realisation of assets and satisfaction of liabilities in the normal course of business. It identified the settlement of lender-bank dues through borrowing from promoter-group companies and management’s plan to develop available land as the factors supporting the basis used for the September 30, 2026 financial results.

The auditor also said its conclusion on Eurotex-related amounts and disclosures relied on reports issued by the associate’s other auditors and on the procedures it performed. The report records PBM Polytex’s share of Eurotex’s net loss as Rs Nil for the reported period, while separately highlighting the associate’s net-worth erosion, closed plants and reliance on prospective management actions.

A review is narrower in scope than an audit and provides moderate assurance, as the November 14, 2026 report explains. The unmodified conclusion means the auditor did not alter its review conclusion because of the going-concern matter, while the specific emphasis makes clear that Eurotex’s future activity and liability settlement remain central to the accounting basis.

Conclusion

PBM Polytex’s September 30, 2026 consolidated filing shows that Eurotex remains on a going-concern basis despite three connected facts: its entire net worth is eroded, Kolhapur operations stopped on March 25, 2019, and closure notices were issued on March 30, 2022. The disclosed support is lender-bank debt settlement through promoter-group borrowing and management’s expectation of future asset realisation and liability settlement.

The next disclosures to watch are progress in the pending writ petition before the Hon’ble High Court, Mumbai and evidence that Eurotex is advancing its stated land-development, yarn-trading or other permitted-business plans. PBM Polytex’s November 14, 2026 filing does not provide a project timeline, financial target or manufacturing reopening plan, leaving execution of those plans unresolved.