Key Quantitative Figures

  • Consolidated Total Income: ₹19,180.98 million (FY25: ₹11,159.48 million)
  • Consolidated Net Profit: ₹1,581.69 million (FY25: ₹344.98 million)
  • Earnings Per Share (Basic & Diluted): ₹3.00 (FY25: ₹0.65)
  • Total Assets: ₹24,036.10 million (FY25: ₹17,871.48 million)
  • Total Borrowings (Current + Non-current): ₹25,299.95 million (FY25: ₹23,591.37 million)
  • Property, Plant and Equipment: ₹11,940.26 million (FY25: ₹11,650.41 million)
  • Capital Work-in-Progress: ₹1,523.23 million (FY25: ₹1,349.25 million)
  • Inventories: ₹3,692.31 million (FY25: ₹2,055.30 million)
  • Trade Receivables: ₹4,642.29 million (FY25: ₹1,756.09 million)
  • Cash and Cash Equivalents: ₹358.08 million (FY25: ₹71.77 million)
  • Depreciation Charge: ₹292.23 million (comprising ₹190.37 million at 20% rate on pre-NCLT PPE and ₹101.86 million at regular rates on new additions)
  • Returnable Drums Inventory: Approximately 17% of total inventory value

Dates of Action

  • Corporate Insolvency Resolution Process (CIRP) admitted: August 24, 2018
  • Resolution Plan approved by NCLT: June 20, 2022
  • Takeover by new management: September 17, 2022 (trigger date)
  • Financial year end: March 31, 2026
  • Auditor's report date: May 26, 2026
  • Board approval date: May 26, 2026

Parties Involved

  • Holding Company: Diamond Power Infrastructure Limited
  • Subsidiary: DICABS Nextgen Special Alloys Private Limited (100% subsidiary)
  • Auditors: Naresh & Co. (FRN: 106928W), with CA Abhijeet Dandekar as signing partner
  • Resolution Applicant: M/s GSEC Limited in consortium with Mr. Rakesh Shah
  • Regulators: BSE Limited, National Stock Exchange of India Limited, SEBI

Basis for Qualified Opinion

The independent auditor's report contains a qualified opinion due to:

1. Incomplete PPE Reconciliation: An ongoing exercise for updating the Property, Plant & Equipment register with physical verification and reconciliation with books of accounts, including Capital Work-in-Progress. The task was allotted to an Independent Agency, which completed primary physical verification with a cut-off date of March 31, 2024, but final value-in-use and remaining useful lives determination was still under process.

2. Depreciation Methodology: For pre-NCLT Property, Plant and Equipment, depreciation is being provided at only 20% of the applicable rate, citing that manufacturing operations were not operating at optimum capacity. Total depreciation charge for the year was ₹292.23 million (₹190.37 million on pre-NCLT PPE @ 20% and ₹101.86 million on new additions at regular rates).

3. Capitalization of Costs: The Holding Company has appropriated and capitalized electricity, manpower and interest costs to CWIP block relating to ongoing expansion/commissioning.

The management expects completion of this exercise in the first quarter of next fiscal year, after which necessary effects including impairment, if any, shall be provided in the books.

Key Audit Matter

Existence and Valuation of Returnable Drums Included in Inventory:

  • Returnable drums constitute approximately 17% of total inventory value
  • Substantial portion lying at customer premises with normal return cycle of 45 days to 6 months
  • Debit notes not raised in all cases of drums remaining beyond stipulated period due to business and customer relationship considerations
  • Confirmations obtained through balance confirmation emails with deemed acceptance clause
  • Auditor tested procedures and found them consistent with applicable accounting principles

Financial Impact

Explicitly quantified in disclosure:

  • The qualified opinion may affect the values of Property, Plant & Equipment (₹11,940.26 million) and Capital Work-in-Progress (₹1,523.23 million)
  • Depreciation charge of ₹292.23 million is subject to potential adjustment
  • Net profit of ₹1,581.69 million is subject to the effects of this matter

Not quantified in disclosure:

  • Potential impairment amount on PPE upon completion of verification exercise
  • Exact amount of prospective depreciation charge once remaining useful lives are finalized

Capital Structure Impact

  • Equity Share Capital: ₹526.97 million (52,697,106 shares of ₹1 each)
  • Other Equity: Negative ₹6,569.01 million (mainly due to Capital Reserve of ₹11,815.45 million and negative Retained Earnings of ₹18,384.53 million)
  • No changes in share capital during the year
  • No dividend declared or paid during the year

Cash Flow Implications

  • Net Cash from Operating Activities: Negative ₹804.31 million (FY25: Positive ₹171.54 million)
  • Net Cash used in Investing Activities: Negative ₹1,427.65 million (FY25: Negative ₹687.11 million)
  • Net Cash from Financing Activities: Positive ₹1,355.32 million (FY25: Negative ₹58.86 million)
  • Net Increase in Cash: ₹286.31 million (FY25: ₹27.28 million)

Subsidiary Information

  • DICABS Nextgen Special Alloys Private Limited (wholly owned subsidiary)
  • Total assets: ₹3,346.36 million (FY25: ₹301.78 million)
  • Total revenues: ₹9,533.78 million (FY25: Nil)
  • Net cash flows: ₹62.91 million (FY25: ₹1.65 million)
  • Financial statements audited by other auditor

Internal Financial Controls

Auditor reported that the Holding Company and Subsidiary Company have, in all material respects, an adequate internal financial controls system over financial reporting operating effectively as at March 31, 2026. However, for the Subsidiary Company, this is based on management representations as it is exempt from obtaining an audit opinion on internal financial controls.

Contingent Liabilities

  • Claims against company not acknowledged as debt: ₹104.00 million (GST disputed demand)
  • CBI, Jammu vs. DPIL & Ors. case (amount not ascertainable)
  • Labour Court cases: ₹1.61 million (FY25)
  • EPF interest and damages demand: ₹410.86 million
  • Corporate performance guarantees: ₹31,571.00 million (FY25: ₹12,750.38 million)
  • Capital commitments: ₹562.02 million (FY25: ₹367.09 million)

Related Party Transactions

Significant transactions with related parties including:

  • Unsecured loans from GSEC Ltd.: ₹10,281.50 million received, ₹1,251.44 million interest paid
  • Unsecured loans from Monarch Infraparks Pvt. Ltd.: ₹5,981.50 million received, ₹552.20 million interest paid
  • Purchase of goods from GSEC Ltd.: ₹1,916.76 million
  • Outstanding unsecured loans from related parties: ₹20,632.19 million (GSEC Ltd.) and ₹8,351.07 million (Monarch Infraparks Pvt. Ltd.)

Resolution Plan Implementation

The company underwent Corporate Insolvency Resolution Process with Resolution Plan approved by NCLT on June 20, 2022. Key terms:

  • Total payment of ₹24,002.75 million to financial and operational creditors
  • Issuance of 0.001% Unsecured Redeemable Bonds of ₹18,992.75 million repayable after 30 years
  • Equity shareholding of existing shareholders extinguished by 99%
  • Accounting effects given to Capital Reserve (Resolution Plan) for items relating to period prior to takeover

Adjustments to Capital Reserve

During the year, ₹1,162.96 million was transferred to Capital Reserve (Resolution Plan) pertaining to period prior to takeover by new management, primarily from recovery of amounts from sale of shares owned by banks that were lying in Trustee account.