McNally Bharat Q2 Loss ₹15.42 Cr, Auditor Adverse Opinion

Key Financial Figures

Standalone Financial Results (Q2 FY27):

Revenue from operations: ₹19.63 crore
Other income: ₹2.23 crore
Total income: ₹21.87 crore
Total expenses: ₹28.47 crore
Loss before exceptional items: ₹6.60 crore
Exceptional items expense: ₹8.82 crore (primarily NCLT-directed provision)
Net loss for quarter: ₹15.42 crore
EPS: (₹4.63) per share

Standalone Financial Results (H1 FY27):

Revenue from operations: ₹34.66 crore
Other income: ₹2.39 crore
Total income: ₹37.08 crore
Total expenses: ₹53.77 crore
Loss before exceptional items: ₹16.69 crore
Exceptional items expense: ₹23.99 crore
Net loss for half year: ₹40.69 crore
EPS: (₹12.21) per share

Balance Sheet Position (as of 30th September 2026):

Total assets: ₹816.03 crore
Equity share capital: ₹33.33 crore
Other equity: ₹496.34 crore
Total equity: ₹529.67 crore
Non-current liabilities: ₹2.57 crore
Current liabilities: ₹283.79 crore
Deferred tax assets (net): ₹517.07 crore
Trade receivables: ₹165.52 crore
Cash and cash equivalents: ₹4.34 crore

Auditor's Review Report

Statutory auditor Singhi & Co issued an adverse review opinion on both standalone and consolidated financial results, citing three major issues:

1. Deferred Tax Asset Recognition: The company continues to carry deferred tax assets of ₹517.07 crore recognized prior to the Resolution Plan approval (before March 2018). The auditor contends there is no convincing evidence for future taxable profits to utilize these assets, stating that had DTA been derecognized, net loss would be higher by ₹517.07 crore.

2. Bank Balance Completeness: The company is in process of obtaining details of all bank accounts, deposits, and facilities. An amount of ₹2.34 crore appearing in bank statements in the company's name has not been included in bank balances as the company is obtaining legal advice on treatment.

3. Joint Venture Operations Exclusion: The company is lead partner in three unincorporated joint arrangements with Mahanadi Coalfields Limited and South Eastern Coalfields Limited comprising five contracts. The JV transactions and balances have been recorded only in separate books and not recognized in the company's standalone books, contrary to Ind AS requirements.

For consolidated results, an additional issue was noted: the financial results of foreign subsidiary MBE Mineral Zambia Limited and joint venture EMC MBE Contracting Company LLC have not been included as their financial information was not made available.

Legal and Regulatory Matters

EPFO Demand:

Employees' Provident Fund Organisation raised a demand of ₹9.60 crore (₹5.65 crore damages under Section 14B + ₹3.96 crore interest under Section 7Q)
Demand follows cancellation of exemption granted to company's PF Trust
Recovery stayed by Jharkhand High Court order dated 22nd January 2026
Matter sub judice, no provision recognized

NCLT Directives (Resolution Plan Implementation):

Bank Guarantee Protection: SRA (BTL EPC) extended bank guarantee protection of ₹251.00 crore to lenders. As of 30th September 2026, protected guarantees of ₹146.06 crore remained active (treated as contingent)
Share Buyback: NCLT order dated 10th June 2026 directed SRA to buy back 5% equity shares from financial creditors for ₹30.00 crore plus interest from 17th February 2026
Financial creditors filed contempt application as buyback process was initiated but not completed
Company has accounted for interest up to 30th September 2026 and is making arrangements for payment subject to regulatory approvals

NCLT Preferential Transaction Order:

Order dated 12th June 2026 held that adjustments aggregating ₹15.18 crore made to JV entities (McNally-Trolex JV, McNally-AML JV, McNally-Trolex-Kilburn JV) constituted preferential transactions
Directed JV entities to refund ₹15.18 crore with 9% interest within 60 days
Company recognized provision of ₹15.18 crore and interest of ₹7.17 crore (up to 30th September 2026) under exceptional items
Company has filed recall application against the order

Enforcement Directorate Investigation:

ED Kolkata conducted searches on 23rd September 2026 under FEMA at premises of persons associated with the company
Investigation relates to pre-CIRP export receivables and funding source for acquisition under Resolution Plan (including Section 29A eligibility)
No search at company premises, no notice received
Company obtained legal opinion stating matters relate to other entities and pre-CIRP period, no impact on financial results

Stock Exchange SOP Fines:

BSE and NSE imposed SOP fines of ₹68.51 lakh and ₹68.76 lakh respectively for corporate governance non-compliance
Partial waivers granted, net payments made: BSE ₹11.69 lakh, NSE ₹16.37 lakh
Trading permission granted effective 1st September 2026 after listing approvals
Promoter holding (90%) and financial creditors' holding (5%) under lock-in for one year from trading permission date

Corporate Action

Director Appointment:

Board approved appointment of Mr. Pradumn Kumar Dixit (DIN: 10308148) as Additional Director (Non-Executive Non-Independent) via circular resolution dated 2nd November 2026
Seeking shareholder approval through postal ballot for regularization as Non-Executive Non-Independent Director liable to retire by rotation
Cut-off date for postal ballot: 13th November 2026
Mr. Dixit is an engineering professional with three decades of experience, currently Senior Advisor to CIDC and Chairman of Indian Council of Consultants, Jharkhand
Not related to any existing director/manager, holds no shares, has no other directorships

Other Significant Disclosures

The company is primarily engaged in construction and engineering activities (no segment reporting required)
Foreign subsidiaries and joint ventures that were fully impaired and not part of Resolution Plan have been written off
Company is undertaking statutory and regulatory compliances for these entities as applicable
Meeting commenced at 4:20 PM and concluded at 6:55 PM on 12th November 2026