Harish Textile Engineers reported a net profit of Rs 5.54 crore for FY 2025-26, up from Rs 0.24 crore last year. However, the company is under scrutiny due to qualified audit opinions highlighting defaults on secured non-convertible debentures (NCDs), unverified MSME interest liabilities, and negative working capital. The firm is currently negotiating with debenture holders while facing ongoing NCLT and regulatory proceedings.
Harish Textile Engineers Reports FY26 Financials Amid Regulatory Hurdles
Gross Income: Rs 138.84 crore | Net Profit: Rs 5.54 crore
Reader Takeaway: Improved annual profits are shadowed by significant liquidity issues, debenture defaults, and ongoing legal/regulatory uncertainties.
What just happened
Harish Textile Engineers Limited (HTEL) announced its financial results for the year ended 31st March 2026, showing an increase in gross income to Rs 138.84 crore and a net profit of Rs 5.54 crore. Despite the profit growth, the company’s statutory auditor, M/s K.M. Swadia & Co., issued a qualified opinion highlighting critical operational and financial lapses.
Why this matters
The auditor’s report flags a formal 'Event of Default' notice received from Axis Trustee Services Limited regarding overdue principal and interest on secured NCDs. Furthermore, the company reported negative working capital, with current liabilities of Rs 64.31 crore exceeding current assets of Rs 47.81 crore, raising concerns regarding its status as a going concern.
Risks to watch
Investors should monitor the outcome of negotiations with debenture holders regarding the NCD defaults. The company is also facing an NCLT petition from creditors and pending show-cause notices from GST and Income Tax authorities. The auditor has also flagged an inability to verify Rs 0.64 crore in interest liabilities toward MSME vendors and unquantified GST risks.
What changes now
The company is seeking shareholder approval to form a new wholly-owned subsidiary focused on technical textiles and man-made fibers, alongside a revised remuneration package for the CFO. These moves suggest a strategic push toward expansion despite current liquidity constraints.
What to track next
Watch for updates on debt restructuring agreements, the status of the NCLT proceedings, and any further disclosures regarding the company’s efforts to improve its working capital position.