Harish Textile Engineers reported a net profit of Rs 2.94 crore for the half-year ending September 2026, up from Rs 2.18 crore last year. Despite the top-line growth, the statutory auditor has issued a qualified opinion, citing defaults on non-convertible debentures and significant concerns over the company's ability to operate as a going concern due to negative working capital.
Harish Textile Engineers Reports Profit Growth Amidst Critical Auditor Qualifications
Revenue rose to Rs 84.75 crore in H1 FY27, up from Rs 66.79 crore in H1 FY26. Net profit improved to Rs 2.94 crore from Rs 2.18 crore in the same period last year.
Reader Takeaway: Revenue and profit grew, but serious debenture defaults and negative working capital raise major going-concern risks.
What just happened
Harish Textile Engineers has released its financial results for the half-year ended September 30, 2026. While the company reported growth in both revenue and profit, the financial statements include a qualified conclusion from the statutory auditor, K M Swadia and Company. The auditor highlighted multiple material weaknesses, specifically pointing to defaults on secured debentures and liquidity constraints.
Why this matters
The auditor's qualified opinion directly questions the company's financial stability. The company has defaulted on Series-III and Series-IV non-convertible debentures, with Axis Trustee Services Limited issuing an "Event of Default" notice for Rs 2.12 crore in outstanding dues. These defaults, combined with an inability to verify MSME interest liabilities and delays in statutory tax payments, suggest a severe cash crunch.
Risks to watch
Investors must monitor the company’s negative working capital position of Rs 13.53 crore. The auditor has explicitly noted that the company’s ability to remain a going concern depends entirely on the renewal of credit facilities and support from lenders. Additionally, the company faces ongoing legal battles, including an NCLT petition regarding business asset transfers, which adds further uncertainty to the operational outlook.
What changes now
The company has proposed a preferential issue of 10,60,800 equity shares at Rs 64 each for consideration other than cash. This move is currently awaiting necessary regulatory approvals from BSE and SEBI. Furthermore, the company continues to operate from premises where the lease with Harish Enterprise Private Limited expired on June 30, 2026, creating potential future operational hurdles.