Pasari Spinning Mills' latest annual report confirms a decade of manufacturing inactivity, with revenue now derived solely from leasing factory premises. Statutory auditors have issued a warning regarding the firm's ability to continue as a going concern due to unresolved legal disputes with the Cotton Corporation of India and significant outstanding tax liabilities. While the company maintains thin profitability, legal execution proceedings and regulatory penalties present material risks to shareholders.
Pasari Spinning Mills FY 2025-26 Report Analysis
Revenue: Rs 0.53 crore; Profit: Rs 0.28 crore.
Reader Takeaway: Leasing income sustains the firm, but legal disputes and auditor going-concern warnings cloud the future outlook.
What just happened
Pasari Spinning Mills released its FY 2025-26 Annual Report, confirming that manufacturing operations have remained suspended since 2010-11. The company has transitioned entirely into a rental-based business model, utilizing its factory premises for lease income. The financial results show a decline in both revenue, down to Rs 0.53 crore from Rs 0.69 crore, and net profit, which fell to Rs 0.28 crore from Rs 0.36 crore in the previous year.
Why this matters
The statutory auditor has issued a formal warning regarding the company's status as a "going concern." This caution stems from persistent legal disputes and mounting tax liabilities. Most notably, the company faces execution proceedings from the Cotton Corporation of India regarding a Rs 7.03 crore claim, currently under an interim stay by the High Court of Karnataka.
The backstory
The company ceased core operations over 15 years ago. Aside from operational inactivity, the report highlights internal governance issues, including the failure of the CFO to sign the financial statements due to medical reasons and unpaid property taxes dating back to FY 2019-20. The company also faces outstanding penalties from the BSE for lapses in SEBI listing compliance.
Risks to watch
Investors should monitor the Rs 1.80 crore contested tax demand dating back to 1999, alongside the pending litigation with the Cotton Corporation of India. These liabilities, combined with the auditor's lack of confidence in the company's operational continuity, pose substantial risks to capital preservation.
What to track next
The 35th Annual General Meeting is scheduled for September 19, 2026. Shareholders will be looking for updates on the legal stay orders and the board's strategy for managing the long-standing tax disputes and the company’s non-operating status.