Bannari Amman Spinning Mills’ seven-year audit record is unqualified, and the group has simplified its structure. That clean opinion sits alongside a sharp reversal in promoter behaviour: pledge has gone from zero to over half the holding in one year, while deeply discounted warrants consolidate control and the 76-year-old Managing Director’s pay surged 89% as the company lost money.
Key findings
- The company borrows from the same promoter entity that receives preferential warrants
Major- Inter-corporate deposits borrowed from Murugan Enterprise Private Limited stood at ₹2.40 Crores in FY2025-26, down from a peak of ₹56.00 Crores in FY2021-22. As of 31 March 2024, loans and advances outstanding to related parties were 5.5 crore, representing 100% of total loans in the nature of loans, unchanged from the prior year. The company states in every annual report from FY2019-20 through FY2025-26 that no related-party transaction of a material nature has potential conflict with the company’s interest. - Managerial personnel pay rose 89% while average employee pay fell
Major- The aggregate percentage increase in remuneration granted to managerial personnel in FY2025-26 was 89.39%, while the average increase for employees other than managerial personnel was negative 1.61%. Managing Director S V Arumugam (age 76 as of FY2024-25) received ₹60.00 lakhs in FY2024-25, a year the company reported a net loss of ₹2.06 crore. At the 25 September 2023 AGM, the special resolution to re-appoint him with a guaranteed minimum salary of ₹5,00,000 per month received 100% votes in favour from promoters and 100% against from public institutions. - Discontinued-operations classification has been used repeatedly to stop depreciation and book a large disposal gain
Major- The company did not charge depreciation of Rs 90.06 lakhs for FY2023-24 on assets in the Garment division because they were classified as part of a disposal group under Ind AS 105. During the half year ended 30 Sep 2024, the company sold its shares in subsidiary Young Brand Apparel Private Limited for Rs 79.54 crore and recognised a gain on sale of investment of Rs 24.69 crore as profit from discontinued operations. The land at SIPCOT, Perundurai continued to be classified as assets held for sale as at 31 Mar 2026. - Revenue has fallen 44% over four years while aged disputed receivables remain on the books
Minor- Revenue declined from ₹1,560cr in FY22 to ₹870cr in FY26, a 44% drop over four years, and operating profit margin touched a low of 2.01% in FY23 before recovering to 9.87% in FY26. As at March 31, 2024, standalone trade receivables included disputed receivables considered good of ₹3.77cr, disputed receivables with significant increase in credit risk of ₹3.47cr, and credit-impaired disputed receivables of ₹1.91cr, most of which were over three years old. Receivable days stood at 70 in FY26, up from 64 in FY25. - Operating cash flow swung sharply while capital allocation relied on equity raises
Minor- CFO swung from ₹160cr in FY21 to ₹56.02cr in FY22, then to ₹0.58cr in FY23, ₹125cr in FY24, ₹22.57cr in FY25, and ₹117cr in FY26, while PAT was negative in FY21, FY23, FY24, and FY25. The company raised Rs.100 crore through a Rights Issue of 33,333,333 equity shares allotted on October 9, 2021. Return on Networth declined from 8.47% as of 31.3.2025 to 3.24% as of 31.3.2026. - The group has simplified its subsidiary web, exiting a material subsidiary at a gain while retaining one negative-net-worth entity
Minor- As at 31 March 2026, the company had only one subsidiary, Bannari Infotech Private Limited, and no associates or joint ventures. Bannari Infotech’s negative net worth deepened from Rs. (535.49) lakhs as at 31 March 2023 to Rs. (768.07) lakhs as at 31 December 2024. The company sold its entire shareholding in material subsidiary Young Brand Apparel Private Limited to S.P. Apparels Limited for ₹79.54 crore, recognising a gain of ₹24.69 crore as profit from discontinued operations.
What to watch
- Promoter pledge level. Next disclosure of promoter pledge in the quarterly shareholding pattern following the 52.47% reported for FY2025-26.
- Inter-corporate deposit repayment. As of the FY2025-26 Annual Report, no scheduled date is given for repayment or renewal of the ₹2.40 Crores deposit from Murugan Enterprise Private Limited.
- Discontinued operations. Whether depreciation resumes on the SIPCOT, Perundurai land if the sale does not complete, and whether further gains or losses from discontinued operations are recognised in FY2026-27.
- Tax appeals. Outcome of income tax appeals for AY 2017-18 through AY 2023-24, each disputed at 10 crore, pending before CIT (Appeals) as of FY2024-25.
Bottom line: This is a disclosed and audited record with seven years of clean opinions and a simplified group structure. The character of the risk is a concentrated governance shift: promoter pledge has moved from zero to majority-pledged in a single year while deeply discounted warrants consolidate control, and the same promoter entity that receives those warrants also lends the company money. Read the promoter shareholding and pledge disclosures with that sequence in mind, and watch whether the outstanding warrants are converted and the inter-corporate deposit gets a repayment date.