Technological Disruption and Financial Risk: A Study in the Manufacturing Sector

This study investigates the impact of technological disruption on financial risk within the manufacturing sector, with a concentrated analysis of Precot Limited, a textile and cotton-based manufacturing firm. The research explores the influence of emerging technologies specifically Artificial Intelligence (AI), the Internet of Things (IoT), and industrial automation on investment behavior, cost structures, operational efficiency, and long-term financial sustainability. By employing quantitative research methods, including trend and ratio analysis of financial statements from FY 2019 to FY 2024, the study evaluates critical financial indicators: liquidity (e.g., current ratio, quick ratio), profitability (e.g., net profit margin, ROCE), and solvency (e.g., debt-to-equity ratio). The findings show that while Precot Limited experienced periods of financial strain and volatility, particularly during the pandemic years and early digital transition, recent financial data suggest gradual improvements in liquidity and profitability metrics—signalling an adaptive response to technological integration. Key financial and operational risks identified include increased exposure to cyber security threats, capital expenditure pressures due to digital infrastructure investments, and heightened competition from tech-optimized global manufacturers. Through quantitative analysis of five years’ financial data (2019–2024), the study assesses the company’s liquidity, profitability, and capital structure using key financial ratios. Despite showing improvement in operating efficiency and net profit margins, Precot faces liquidity constraints and high capital expenditure challenges due to technology upgrades. The study also observes internal challenges such as workforce reskilling needs and supply chain recalibration. The research concludes by offering strategic recommendations, including phased digital adoption, investment in cyber security frameworks, financial planning for tech upgrades, and policy support for innovation-led growth. These findings contribute to broader discussions on financial risk management and sustainable technological transformation in traditional manufacturing environments, and can inform both managerial strategies and policymaking in similar industrial contexts