Galaxy Bearings Limited, a key player in the Indian precision bearing manufacturing industry, has reported its audited standalone financial results for FY 2024–25, showcasing resilience amid serious geopolitical and compliance headwinds. Despite facing significant restrictions due to sanctions imposed by the Office of Foreign Assets Control (OFAC), US Department of Treasury, the company has posted a net profit of ₹13.71 crore for the financial year ended March 31, 2025, as per the statutory audit completed by J. T. Shah & Co., Chartered Accountants.

This disclosure was made in accordance with Regulation 33 of SEBI (LODR) Regulations, 2015, and was approved by the Board of Directors of Galaxy Bearings on May 23, 2025.

Audit Opinion & Financial Overview:

The independent audit report issued by J. T. Shah & Co. confirms that the company’s financial statements are true and fair, prepared in accordance with Indian Accounting Standards (Ind AS) and conform to statutory and regulatory requirements.

Key Highlights from the FY25 Financials:

• Revenue from operations: ₹104.22 crore

• Other income: ₹2.53 crore

• Total income: ₹106.75 crore

• Total expenses: ₹88.22 crore

• Profit before tax: ₹18.52 crore

• Net profit after tax: ₹13.71 crore

• Total comprehensive income: ₹13.54 crore

• Basic & diluted EPS: ₹43.12 per share (₹10 face value)

These results reflect a year-over-year decline from the FY24 net profit of ₹18.84 crore, largely attributable to external disruptions and forex liquidity challenges caused by the US sanctions.

Sanctions by US Treasury (OFAC):

In a notable disclosure under Note 4 of the financial statements, it has been revealed that Galaxy Bearings Limited was added to the OFAC SDN (Specially Designated Nationals and Blocked Persons) List on October 30, 2024 under Executive Order 14024. This designation was made on allegations that the company supplied dual-use high-priority equipment used in Russian military applications, placing it on the Common High Priority Items List (CHPIL).

Consequences of the OFAC designation include:

• Complete restriction on access to USD and Euro through official banking channels

• Disruption of foreign trade settlements and overseas procurement

• Reputational damage impacting international client relations and financial credibility

Company’s Legal Response:

Galaxy Bearings stated that it had no prior knowledge of any sanctioned entities using its products. Upon learning about the designation, the company immediately informed the stock exchange via filing dated November 6, 2024, and has since engaged US-based legal counsel to initiate an application for expedited removal from the SDN list.

This matter remains unresolved at the reporting date, but the company has expressed full cooperation with authorities and emphasized its compliance-oriented business model.

Audit Emphasis and Reporting Considerations:

The statutory auditors have highlighted the OFAC issue under the "Emphasis of Matter" section, clarifying that while the matter is material to user understanding, it does not qualify as a modification to the overall audit opinion. The firm affirms that the company’s financial disclosures are adequate and presented in compliance with applicable accounting norms.

Furthermore, the audit procedures included a review of:

• The company’s internal control systems and governance

• Appropriateness of going concern assumptions

• Accuracy of deferred tax and income tax provisions

• Impact of the SDN listing on financial operations

Balance Sheet Snapshot (As on March 31, 2025):

• Total Assets: ₹149.75 crore

• Total Equity: ₹106.76 crore

• Current Liabilities: ₹40.69 crore

• Non-current Liabilities: ₹2.29 crore

• Cash and Cash Equivalents: ₹32.93 lakh

The company reports healthy capital reserves and a solid asset base despite geopolitical restrictions.

Cash Flow Position:

The net cash flow from operations was negative at ₹(190.85) lakh, a reversal from the positive ₹526.73 lakh in FY24, mainly due to:

• Significant reduction in trade receivables collection

• Higher raw material procurement costs

• Disruption in USD/EUR transactions affecting working capital cycles

Investing and financing activities, including capex of ₹606.77 lakh and short-term borrowings of ₹13.63 crore, helped stabilize liquidity.

Management's View & Segment Outlook:

According to the Board of Directors, the company remains committed to compliance, transparency, and legal redressal. Galaxy Bearings continues to engage with relevant authorities to clear its name from the SDN list, which management considers an unintended misclassification.

The auditors confirm that the company operates in a single reportable segment, namely ball and roller bearings, with all other ancillary operations directly related to the primary business.

Conclusion:

Galaxy Bearings Limited has shown remarkable financial resilience in FY25 by maintaining profitability and operational continuity despite being hit by severe external challenges such as US sanctions and forex disruptions. The company’s legal initiative to delist itself from OFAC’s SDN list, if successful, could significantly restore its global business relationships and financial access.

This case is a key example of how geopolitical events can unexpectedly impact Indian mid-sized manufacturers, and it also reflects how robust internal governance, transparency, and external audit validation help in sustaining investor confidence.

The Upcoming IPOs in this week and coming weeks are Crizac, Silky Overseas, Vandan Foods, Pushpa Jewellers, Cedaar Textile, Marc Loire Fashions.

The Current active IPO are Neetu Yoshi, Adcounty Media India, Moving Media Entertainment, Valencia India, PRO FX Tech, Ace Alpha Tech, Indogulf Cropsciences, Suntech Infra Solutions, Rama Telecom, Supertech EV, Sambhav Steel Tubes, HDB Financials.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.