Winsome Yarns receives qualified September review over balances

Winsome Yarns Limited received a qualified conclusion on its results for the half year ended September 30, 2026, because confirmations and reconciliations for several balances remain pending and their financial impact cannot be ascertained. The review also noted negative net worth and unresolved Sales Tax, Income Tax and Goods and Services Tax cases.

Why did Winsome Yarns receive a qualified conclusion?

Winsome Yarns received a qualified conclusion because its auditor, Dhana and Associates, could not determine the effect of missing confirmations and reconciliations for a range of financial statement balances as at September 30, 2026. The matters cover accounts payable, bank balances including fixed deposits, other current assets, leasing advances, security deposits, secured loans, other liabilities, provisions and contingent liabilities.

Winsome Yarns’ management certified the balances, but the auditor said the effect of the absent confirmations was unascertainable and therefore did not comment on it. The auditor also said stronger internal controls would improve reliability. This was a limited review under Standard on Review Engagements 2410, rather than a full audit, so the auditor did not express an audit opinion on the September 2026 statement.

The qualified conclusion did not state that the September 2026 results contained a material misstatement. Subject to the qualified matters, the auditor said nothing had come to its attention indicating that the unaudited statement failed to make disclosures required under Regulation 33 of the Securities and Exchange Board of India listing regulations. The qualification instead identifies areas where the auditor could not quantify the possible accounting effect.

What does negative net worth mean for Winsome Yarns’ September results?

Winsome Yarns had accumulated losses that resulted in negative net worth at September 30, 2026, while its unaudited financial results were still prepared on a going-concern basis. The stated basis is the National Company Law Tribunal, Chandigarh Bench’s approval of the resolution plan on April 16, 2026, and the expected implementation of that plan.

The latest reported performance also showed a widening loss. Winsome Yarns reported a loss after tax of Rs 16.62 crore for the six months ended September 30, 2026, compared with a loss of Rs 4.85 crore in the six months ended September 30, 2025. Total expenses rose to Rs 17.01 crore from Rs 6.70 crore, while total revenue fell to Rs 39 lakh from Rs 1.85 crore.

The September 2026 quarter accounted for Rs 13.30 crore of the half-year loss, compared with Rs 3.32 crore in the June 2026 quarter and Rs 1.57 crore in the September 2025 quarter. Finance cost was Rs 10.11 crore in the September 2026 quarter, while depreciation and amortisation was Rs 2.37 crore. Winsome Yarns reported no income from operations in that quarter and Rs 2 lakh of other income.

Which tax and accounting matters remain unresolved at Winsome Yarns?

Winsome Yarns has not completed the accounting assessment, reconciliation and associated statutory or regulatory compliances for pending Sales Tax, Income Tax and Goods and Services Tax cases. The auditor said recognition and measurement of adjustments for those matters remain subject to those steps, despite the effect given during the period to the April 16, 2026 insolvency order.

Winsome Yarns also disclosed that it has not provided for interest and penalties on borrowings. Its stated response is that claims were invited from stakeholders during the Corporate Insolvency Resolution Process, or CIRP, and that it will give effect to claims in its books in line with the sanctioned resolution plan after implementation. The filing does not quantify the potential interest or penalty adjustment.

A further accounting matter is the carrying value of investments. Winsome Yarns said accounting for investments remains subject to reconciliation in response to the auditor’s remark on non-provision for diminution in carrying value. The filing separately says CIRP costs are fully accounted, distinguishing those costs from the unresolved balances, tax cases and investment reconciliation.

How is Winsome Yarns implementing its approved resolution plan?

Winsome Yarns is implementing a resolution plan valued at Rs 162.90 crore that the tribunal approved on April 16, 2026, after its admission to CIRP on December 22, 2023. Mohini Health and Hygiene Limited submitted the approved plan, which provides for resolution of claims and liabilities, funding for revival and operations, and implementation over the plan’s specified period.

Winsome Yarns said the plan is being implemented under supervision of a Monitoring Committee comprising representatives of the committee of creditors and the successful resolution applicant, chaired by an insolvency professional. The existing board’s powers remain suspended under the arrangement described in the auditor’s report. The tribunal order also ended the insolvency moratorium from April 16, 2026.

During financial year 2026-27, Winsome Yarns plans to make accounting adjustments for assets and liabilities, including write-offs, extinguishment, settlement or derecognition where applicable under the tribunal order. Management said the resulting net impact is intended to be recognised in the books and, where permitted, routed through capital reserves. The exact recognition remains conditional on assessment, reconciliation and compliance work.

What business activity does Winsome Yarns currently report?

Winsome Yarns reports one operating segment, textiles, covering yarn, knitwear and related revenue, under Indian Accounting Standard 108. Its yarn spinning and knitting activity has continued on a job-work basis for third parties to the extent possible with its limited available resources, according to the September 2026 results notes.

The reported numbers indicate limited operating income during the first half. Income from operations was nil for the six months ended September 30, 2026, compared with Rs 18 lakh in the corresponding 2025 period, while other income was Rs 39 lakh against Rs 1.67 crore. Employee benefit expense declined to Rs 29 lakh from Rs 53 lakh, but finance cost of Rs 10.18 crore and depreciation of Rs 4.79 crore drove the higher overall expense total.

Winsome Yarns had paid-up equity capital of Rs 70.71 crore at September 30, 2026, with a face value of Rs 10 per share. Basic and diluted loss per share for the six-month period was Rs 2.35, compared with Rs 0.69 a year earlier. The filing also says the former registered office was vacated on December 30, 2024, and operations are presently being conducted from its knitting unit in Mohali.

Conclusion

The September 2026 review shows that Winsome Yarns’ reported figures remain qualified by unresolved evidence for creditor, lender, bank, asset and liability balances, as well as pending tax-case accounting. The Rs 16.62 crore half-year loss, nil operating income and negative net worth provide the financial backdrop to those unquantifiable matters, even as the business remains presented as a going concern.

The next item to watch is the implementation of the Rs 162.90 crore resolution plan during financial year 2026-27. Winsome Yarns has said it will complete relevant asset and liability adjustments, subject to reconciliation and compliance requirements, and incorporate their effects in financial results for relevant quarters as applicable.