Pasari Spinning Mills Limited is a **Bangalore-based** entity currently navigating a fundamental strategic pivot. Historically a manufacturer of **Cotton Yarn**, the company has transitioned away from capital-intensive production following a decade-long suspension of its manufacturing operations. Today, the company functions as an asset-holding and investment entity, seeking to leverage its real estate and corporate structure to enter the **Retail and Food Industries**. --- ### **Corporate Infrastructure & Asset Base** While the company’s primary industrial activity has ceased, it maintains a significant physical asset base in Karnataka. The management conducts regular physical verification of **Property, Plant, and Equipment (PPE)** and maintains title deeds for all immovable properties. | Facility Type | Location | Status | | :--- | :--- | :--- | | **Registered Office** | Jayanagar 6th Block, **Bangalore** | Operational | | **Factory Premises** | KIADB Industrial Area, **Nanjangud, Mysore** | Closed (Available for Lease) | * **Historical Capacity**: The Nanjangud plant previously operated with a spindle capacity of **17,472**. * **Manufacturing Status**: Production has been suspended since **July 2011** following formal permission from the **Hon'ble Labour Department**. * **Asset Management**: PPE and **Intangible Assets** are recorded at nominal values. The company has not recently revalued these assets to reflect current fair market prices. --- ### **Strategic Pivot: From Manufacturing to Retail & Food** Recognizing the structural headwinds in the textile mill segment, the Board of Directors has initiated a total shift in the business model. The company has no intention of resuming textile manufacturing and is instead focusing on more lucrative service and consumer sectors. * **Diversification**: The **Memorandum of Association (MoA)** has been amended to include a new object clause for entry into the **Food Industry**. * **Retail Strategy**: Management views the **Retail Market** as a primary vehicle for recovery from the current financial crisis, citing India’s status as a fast-growing economy with rising domestic purchasing power. * **Asset Monetization**: A core component of the current strategy is to **lease out the factory premises** at Nanjangud to generate steady rental income, rather than engaging in direct production. * **Leadership**: **Mr. Krishna Kumar Gupta** was re-appointed as Managing Director for a **5-year term** effective **August 31, 2023**, to oversee this transition. --- ### **Financial Performance & Capital Structure** The company operates under a single reportable segment model (**IAS-108**). After a period of volatility, the company has achieved two consecutive years of profitability, though revenue remains modest. **Comparative Financial Highlights (Standalone)** | Particulars (in Rs.) | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :--- | :--- | :--- | | **Total Revenue** | **68,66,480** | **68,87,670** | **0** | | **Profit Before Tax (PBT)** | **34,36,790** | **40,88,350** | **(27,48,777)** | | **Profit After Tax (PAT)** | **36,04,770** | **42,53,420** | **(27,48,777)** | **Equity & Funding Profile** * **Authorised Capital**: **Rs. 14,00,00,000** (1.40 crore Equity Shares of **Rs. 10** each). * **Paid-up Capital**: **Rs. 13,80,00,000** (1.38 crore Equity Shares of **Rs. 10** each). * **Related Party Support**: Operations are sustained through non-interest-bearing loans from related parties, repayable on demand. As of late 2024, a significant borrowing of **Rs. 1,91,47,490** was noted from **Pasari Exports Limited**. * **Debt Servicing**: In 2025, the company repaid **Rs. 50.00 lakh** to a related party. --- ### **Critical Risk Factors & Contingent Liabilities** The company faces substantial legal and operational risks that could impact its "going concern" status or asset liquidity. **1. The Cotton Corporation of India (CCI) Dispute** The most significant threat is a long-standing legal battle with the **CCI** regarding an arbitration award from 2006. * **Claim Value**: CCI filed an execution petition for **Rs. 7,03,12,476.47**. * **Asset Attachment**: In **December 2025**, a **Proclamation of Sale** was issued for the company's properties to satisfy this debt. * **Current Status**: As of **January 2026**, the **Hon'ble High Court of Karnataka** has granted a **stay** on the sale. * **Provisioning**: The company has disclosed a **contingent liability** of **Rs. 6,39,22,746** related to this matter. **2. Operational & Compliance Risks** * **Tax Arrears**: The company has not paid **property tax** since **FY 2019-20**, with an estimated provision of **Rs. 15.87 lakh** outstanding. * **Regulatory Fines**: The company is currently in discussions with the **BSE** regarding unpaid fines and has yet to file a waiver application. * **Governance Gaps**: Recent financial statements lacked the **CFO’s signature** due to health reasons, and auditors have noted omissions in **Ind AS 24** (Related Party) and **Ind AS 37** (Contingent Liabilities) disclosures in interim reports. --- ### **Industry Context & Macroeconomic Outlook** The company’s historical failure in manufacturing was driven by systemic issues that continue to plague the Indian textile sector. Any future success in the retail or food sectors will be subject to similar macroeconomic pressures. * **Historical Headwinds**: High volatility in raw cotton costs, rising electricity tariffs, frequent power supply interruptions, and chronic labor absenteeism. * **Sectoral Challenges**: Intense competition from low-cost garment-producing nations and the impact of the **Red Sea crisis** on global logistics. * **Growth Catalysts**: Management remains optimistic about the **US market revival** and the general resilience of the Indian economy, which supports the planned move into the domestic retail and food sectors. * **Policy Dependency**: The company continues to seek **reliefs and concessions** from the **Government of Karnataka** regarding historical **Sales Tax** matters and remains engaged with the **BIFR** framework for resolution.