Shree Karni Fabcom September-half profit falls 29% year-on-year

Shree Karni Fabcom Limited reported standalone profit after tax of Rs 4.38 crore for the half year ended September 30, 2026, down 29% from Rs 6.17 crore a year earlier, as revenue from operations fell 11% to Rs 95.15 crore and operating activities used Rs 1.80 crore of cash. The board approved the unaudited results on November 5, 2026.

Why did Shree Karni Fabcom’s September-half profit fall?

Shree Karni Fabcom’s profit fell because its Rs 12.26 crore decline in total revenue exceeded the Rs 9.40 crore reduction in total expenses. Total revenue, including other income, was Rs 96.09 crore in the half year ended September 30, 2026, compared with Rs 108.36 crore in the corresponding 2025 half. Profit before tax consequently declined to Rs 5.41 crore from Rs 8.28 crore.

Revenue from operations decreased by Rs 11.91 crore year on year to Rs 95.15 crore, while other income declined to Rs 94.19 lakh from Rs 1.29 crore. The filing does not give a product-wise, customer-wise or volume-based explanation for the lower revenue. It states that segment reporting under Accounting Standard 17 is not applicable and that Shree Karni Fabcom operates in a single segment.

Tax expense fell to Rs 1.03 crore from Rs 2.11 crore, partly limiting the reduction in post-tax profit. The September 2026 tax charge included current tax of Rs 76.86 lakh, deferred tax of Rs 26.24 lakh and Rs 1,000 of income tax for earlier years. Basic and diluted earnings per share, based on weighted-average shares, declined to Rs 6.01 from Rs 8.54.

Which costs changed for Shree Karni Fabcom?

Shree Karni Fabcom’s lower materials cost and finance cost were outweighed by higher employee-benefit spending and depreciation. Cost of materials consumed fell by Rs 8.11 crore to Rs 73.38 crore in the September 2026 half from Rs 81.48 crore a year earlier. Finance costs declined to Rs 2.69 crore from Rs 5.40 crore.

Employee-benefit expense increased to Rs 4.21 crore from Rs 1.41 crore, while depreciation and amortisation rose to Rs 2.62 crore from Rs 2.47 crore. Other expenses edged down to Rs 4.86 crore from Rs 4.97 crore. Changes in inventories of finished and semi-finished goods were Rs 29.38 lakh, compared with Rs 1.34 crore in the September 2025 half.

The reported figures put profit before tax at about 5.6% of total revenue in the 2026 half, compared with about 7.6% a year earlier. This is a calculation from the disclosed standalone profit before tax and total revenue, not a management target. Shree Karni Fabcom said on June 24, 2026 that its board approved closing its stitching unit to optimise operational capabilities, improve profitability and mitigate geopolitical risks.

What happened to Shree Karni Fabcom’s operating cash flow?

Shree Karni Fabcom used Rs 1.80 crore in operating activities during the half year ended September 30, 2026, after generating Rs 10.63 crore of operating profit before working-capital changes. The company reported cash generation from operations of negative Rs 1.03 crore, followed by Rs 76.86 lakh of taxes paid. The comparable cash-flow column in the filing is for the full year ended March 31, 2026, rather than the prior-year half.

The largest stated working-capital use was a Rs 6.64 crore increase in trade and other receivables. Other non-current assets increased by Rs 5.35 crore, while trade and other payables decreased by Rs 4.65 crore, also reducing cash. A Rs 5.31 crore inventory decrease and a Rs 1.81 crore reduction in other current assets partly offset these outflows.

Investing activities used Rs 9.96 crore, including Rs 11.63 crore spent on fixed assets and Rs 31.10 lakh spent on investments. Fixed-asset sales generated Rs 1.54 crore. Financing activities provided Rs 13.11 crore, and cash and cash equivalents rose to Rs 1.43 crore at September 30, 2026 from Rs 7.35 lakh at March 31, 2026.

How did Shree Karni Fabcom’s balance sheet change?

Shree Karni Fabcom’s total assets rose to Rs 238.00 crore at September 30, 2026 from Rs 224.29 crore at March 31, 2026, while trade receivables increased by Rs 6.64 crore to Rs 56.93 crore. Inventories declined by Rs 5.31 crore to Rs 62.07 crore over the same six-month period, consistent with the inventory-related cash inflow in the cash-flow statement.

Shareholders’ funds increased by Rs 22.26 crore to Rs 138.49 crore. Long-term borrowings rose by Rs 12.66 crore to Rs 24.41 crore, whereas short-term borrowings fell by Rs 14.93 crore to Rs 47.47 crore. Property, plant and equipment increased to Rs 86.77 crore from Rs 79.43 crore, following the Rs 11.63 crore fixed-asset purchases reported in the cash-flow statement.

What capital and shareholder actions did Shree Karni Fabcom report?

Shree Karni Fabcom converted all 3.15 lakh outstanding share warrants into equity shares after receiving the balance consideration in three tranches on August 25, August 29 and September 2, 2026. The conversion increased paid-up equity share capital by Rs 31.50 lakh to Rs 7.54 crore and increased securities premium by Rs 23.78 crore. The warrants had been approved by shareholders on February 12, 2025 and were issued at Rs 765 each, including premium.

Shareholders approved a final dividend of Rs 0.25 per equity share, equivalent to 2.5% of the Rs 10 face value, for the financial year ended March 31, 2026. The Rs 18.86 lakh dividend was approved at the September 30, 2026 annual general meeting, adjusted against retained earnings at that date and paid on October 23, 2026.

The statutory auditor conducted a limited review of the unaudited standalone results and said nothing had come to its attention indicating a material misstatement or inadequate disclosure under the applicable listing regulations. The auditor also said a review relies mainly on inquiries and analytical procedures and provides less assurance than an audit.

Conclusion

Shree Karni Fabcom remained profitable in the September 2026 half, but revenue, profit before tax and profit after tax all declined from the previous year. The results also show a movement from operating cash generation before working-capital changes of Rs 10.63 crore to net operating cash use of Rs 1.80 crore, as receivables and other non-current assets increased.

The next disclosed matter to watch is the effect of the stitching-unit closure, which Shree Karni Fabcom said had no material impact by September 30, 2026. The company also said it will assess and account for any further effect of the Labour Codes once the related rules are notified.