Samtex Fashions Limited faces Rs 437.57 crore DRT demand

Samtex Fashions disclosed that wholly owned subsidiary SSA International Ltd received a Rs 437.57 crore demand from Debt Recovery Tribunal-3, Delhi, on October 30, 2026, while the auditor said lender auctions of subsidiary assets were not reflected in results for September 30, 2026 because sale details were unavailable.

What does the Rs 437.57 crore DRT demand mean for Samtex Fashions?

The Rs 437.57 crore demand was generated by Debt Recovery Tribunal-3, Delhi, for SSA International on October 30, 2026, according to the emphasis-of-matter paragraph in Samtex Fashions’ limited-review report for the September quarter. The filing does not state the components of the demand, the final recoverable amount, or whether SSA International made a corresponding accounting entry.

The demand follows a consortium-bank petition before Debt Recovery Tribunal-II, Delhi, for which Samtex Fashions received an intimation under Original Application 530/18 dated May 24, 2018. The auditor said Samtex Fashions gave corporate guarantees for secured loans of SSA International that banks classified as non-performing assets, or NPAs.

IDBI Bank declared SSA International, its directors and guarantors, including Samtex Fashions, as willful defaulters under Reserve Bank of India guidelines, according to the September 30, 2026 review report. The report also said IDBI Bank took possession of SSA International premises under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, but updated proceedings details were not made available to the auditor.

Which SSA International assets have lenders auctioned?

Lenders issued sale notices covering SSA International’s Samalkha plant in Panipat district, Haryana, and an industrial plot at Plot No. 11, Mandideep Industrial Area, Phase-II, Raisen district, Madhya Pradesh. The auditor said SSA International learned through newspaper advertisements that consortium member banks had executed an auction of assets at the Samalkha plant by September 30, 2026.

Samtex Fashions has not recorded the auctions because it lacks details of the assets sold, sale values and each bank’s use of proceeds. The auditor said this prevents recognition of reductions in property, plant and equipment, related depreciation, financial-institution dues, disposal gains or losses, and related tax effects in the September 30, 2026 results.

The report also said consortium lenders sold mortgaged assets of directors and guarantors during the current and earlier years and adjusted proceeds against the company’s dues to financial institutions. Samtex Fashions had not recorded the effects of those transactions as at September 30, 2026, and the auditor said the consequential adjustment could not be ascertained.

Why are Samtex Fashions’ September 2026 results qualified?

The auditor issued a qualified conclusion on consolidated unaudited results for the quarter and half year ended September 30, 2026 because it could not quantify the effects of bank interest, asset auctions, impairment and other matters. SSA International defaulted on repayment obligations to banks, but management said it could not estimate interest payable because it had not received bank statements or other relevant documents for many years.

SSA International did not recognise interest expense after Debt Recovery Tribunal adjudication, citing Reserve Bank of India prudential norms on income recognition, asset classification and provisioning for NPAs. The auditor said it could not comment on the impact of that treatment without supporting information for the September 30, 2026 financial statements.

Samtex Fashions also did not perform impairment testing of fixed assets under Indian Accounting Standard 36, or Ind AS 36, and charged no depreciation on property, plant and equipment for the quarter ended September 30, 2026. The auditor said the impact of any impairment could not be determined because no supporting calculation was available.

The review further cited long-outstanding trade receivables that were neither confirmed nor tested for impairment through expected-credit-loss allowances at September 30, 2026. It also identified unconfirmed loans, trade payables, deposits, government balances, bank balances and borrowings, alongside insufficient audit evidence for physical verification of fixed assets and inventory.

How did Samtex Fashions perform in the September 2026 quarter?

Samtex Fashions reported total income of Rs 1.59 lakh in the three months ended September 30, 2026, compared with Rs 0.20 lakh in the June 2026 quarter and Rs 1.15 lakh a year earlier. Profit before tax was Rs 0.20 lakh, against losses before tax of Rs 13.86 lakh in June 2026 and Rs 8.15 lakh in the September 2025 quarter.

For the half year ended September 30, 2026, total income was Rs 1.79 lakh, compared with Rs 1.66 lakh in the corresponding 2025 period, while loss before tax narrowed to Rs 13.65 lakh from Rs 20.55 lakh. The filing therefore showed a smaller first-half loss, but the auditor said the group made losses in both the current and preceding year.

The September-quarter figures were prepared on a going-concern basis despite the auditor identifying material uncertainty over that basis. The auditor cited fully eroded group net worth, current liabilities exceeding current assets and no business activity during the year ending September 30, 2026.

What other balance-sheet issues did the auditor identify?

SSA International’s books showed Rs 55.24 lakh in several bank current accounts at September 30, 2026, but no transactions were made in those accounts during the year and bank statements were not provided. The auditor therefore could not confirm the balances or reconcile transactions, if any, made by banks.

Samtex Fashions held inventory of Rs 25.32 lakh at September 30, 2026, which had not been used for a long period because no business activity was undertaken during the year. The auditor said no provision had been made for potential damage, obsolescence or a decline in selling price of those inventory items.

The report also questioned a recognised deferred-tax asset of Rs 92.53 lakh at September 30, 2026 because it lacked probable certainty and convincing evidence of future taxable income for utilisation. Samtex Fashions had also deposited Rs 1.19 crore under protest in income-tax litigation for different financial years, while the auditor said details and current status were not supplied.

The auditor noted that the group was not regular in payments of undisputed provident-fund and tax-deducted-at-source dues during the year ended September 30, 2026. It also said goods and services tax input-credit balances did not match the online portal and that sufficient evidence was unavailable to classify trade payables between micro, small and medium enterprises and other creditors.

Conclusion

The September 2026 filing shows that Samtex Fashions faces a documented Rs 437.57 crore Debt Recovery Tribunal demand at SSA International alongside unresolved lender recoveries and asset auctions. The auditor could not determine the resulting changes to assets, bank dues, disposal gains or losses, depreciation, taxation and accumulated losses because key sale and banking information was unavailable.

The next disclosed matters to watch are the unresolved details of assets sold, auction proceeds, their allocation among lenders and any related accounting adjustments. Updates on the tribunal proceedings, bank balances and the status of lender recovery actions were unavailable to the auditor as of the report dated November 13, 2026.