Pasari Spinning Mills Posts 22.45% Profit Decline for FY26, Auditor Flags 'Going Concern' Uncertainty

Pasari Spinning Mills Limited recorded a net profit of ₹0.28 crore for the financial year ended March 31, 2026, a decrease of 22.44% from ₹0.36 crore in the previous year. Basic Earnings Per Share (EPS) also fell to ₹0.20 from ₹0.26.

Reader Takeaway: Profitability hit by lost rent; high legal risk from CCI dispute.

What just happened

Pasari Spinning Mills announced its audited standalone financial results for the fiscal year 2026. The company's total income fell by 22.45% to ₹0.53 crore (₹53.25 lakh) from ₹0.69 crore (₹68.66 lakh) in FY25. This revenue decline impacted net profit, which dropped by 22.44% to ₹0.28 crore (₹27.96 lakh).

The company attributed the profit reduction primarily to a significant decrease in rental income. Premises were vacated by January 2026 following a court order, leading to this loss of revenue.

Why this matters

The most critical development is the auditor's report, which raises a 'material uncertainty' regarding the company's ability to continue as a 'going concern'. This uncertainty stems from a significant ongoing legal dispute with the Cotton Corporation of India (CCI).

Furthermore, the auditors noted a governance issue: the Chief Financial Officer (CFO) did not sign the financial statements, which is a violation of Section 134 of the Companies Act, 2013. The company also has outstanding property tax dues since FY 2019-20.

The backstory

The legal battle with the Cotton Corporation of India involves alleged dues of ₹7.03 crore. Execution proceedings were initiated, and a Proclamation of Sale was issued for the company's property. Although the High Court granted a stay on execution in January 2026, the case remains pending. A contingent liability of ₹6.39 crore is disclosed due to this dispute.

Additionally, Pasari Spinning Mills settled ₹0.50 crore of its outstanding liability to related party Pasari Exports Limited during the year, with ₹1.21 crore remaining payable as of March 31, 2026.

What changes now

Investors are faced with a heightened risk profile. The 'going concern' warning means the company's future operations and ability to meet its obligations are in doubt. The lack of CFO signature on financial statements points to potential control weaknesses.

The company must address the CCI legal dispute and work towards resolving its financial and statutory obligations, including property tax.

Risks to watch

The primary risk is the outcome of the CCI litigation, which could lead to the sale of company assets. The auditor's 'going concern' note signifies fundamental financial instability. Governance lapses, such as the unsigned financial statements and pending tax dues, add to the concerns.

Peer comparison

Specific peer comparison data is not available in the filing. However, companies facing 'going concern' warnings and significant legal liabilities typically experience increased investor scrutiny and stock price volatility.

Context metrics (time-bound)

• Total Income (FY26): ₹0.53 crore (₹53.25 lakh)
• Net Profit (FY26): ₹0.28 crore (₹27.96 lakh)
• EPS (FY26): ₹0.20
• Property Tax Dues: Since FY 2019-20
• CCI Dispute Amount: ₹7.03 crore (alleged dues)
• Contingent Liability: ₹6.39 crore
• Related Party Liability Settled: ₹0.50 crore
• Related Party Liability Outstanding: ₹1.21 crore

What to track next

Investors should closely monitor developments in the CCI legal case, any communication from the company regarding resolution of governance issues, and its ability to generate income and manage liabilities.