Audit Qualifications and Financial Impact

The statutory auditors, M/s JCR & Co. LLP Chartered Accountants, issued a qualified opinion on the standalone financial results for FY26 with four specific qualifications:

First Qualification - ECL Provision Reversal:

  • The company reclassified a loan account from "Doubtful Asset" to "Sub-Standard Asset" and reduced Expected Credit Loss (ECL) provision by ₹1.84 crore
  • Basis: TDS of ₹14.42 lakhs deposited by borrower through late filing after audit period and expectation of recovery by May month end
  • Actual recovery not made till reporting date (March 31, 2026)
  • Impact: ECL provision and loss understated by ₹1.84 crore

Second Qualification - Unprovided Interest Expense:

  • Interest expense not provided in few loan accounts totaling ₹3.38 crores
  • Reason: Loan documents not available with management
  • Additional interest expense of approximately ₹2.43 crores not provided for one borrower
  • Total impact: Finance cost understated by ₹5.81 crore (₹3.38 cr + ₹2.43 cr) and current liabilities understated

Third Qualification - Unverified Investments:

  • Investments (quoted and unquoted shares) amounting to ₹62.96 lakhs shown in books
  • Company lacks documents justifying ownership of these investments
  • Management actively following up with concerned parties
  • Carrying value of investments cannot be verified

Fourth Qualification - RBI Non-compliance:

  • Company did not obtain RBI approval for change in management during FY 2024-25
  • Potential consequences: Monetary penalty, void acquisition transaction, regulatory comments

Quantified Financial Impact of Qualifications

| Financial Figure | Audited Figure (As Reported) | After Impact | Change |

| Total Income | ₹1,196.92 lakh | ₹1,196.92 lakh | No change |

| Total Expenditure | ₹1,401.97 lakh | ₹1,588.40 lakh | +₹186.43 lakh |

| Net Profit/(Loss) | (₹142.81) lakh | (₹329.24) lakh | Increased loss by ₹186.43 lakh |

| Earnings Per Share (EPS) | (₹0.14) | (₹0.33) | Deteriorated by ₹0.19 |

| Total Assets | ₹19,024.51 lakh | ₹18,840.51 lakh | Reduced by ₹184.00 lakh |

| Total Liabilities | ₹18,093.46 lakh | ₹18,095.89 lakh | Increased by ₹2.43 lakh |

| Net Worth | ₹931.05 lakh | ₹744.62 lakh | Reduced by ₹186.43 lakh |

Management's Response to Qualifications

First Qualification (ECL): Management maintains asset tier migration aligns with credit intent and post-closing validations. Previous 'Doubtful' status was provisional and conservative. TDS filings (₹14.42 lakhs) and interest remittance by borrower in May 2026 verified operational capacity, justifying reclassification to 'Sub-Standard'.

Second Qualification (Interest): For ₹3.38 crore portfolio, verification review ongoing to recover physical agreements. For ₹2.43 crore specific item, advanced negotiations regarding interest waiver, restructuring, or settlement ongoing. Accrual would compromise legal standing and distort expected cash flows.

Third Qualification (Investments): Management states shares are completely owned by company and properly recognized. Temporary absence of holding statements due to structural transitions and dematerialization procedures. Active tracking with investee firms and RTAs underway for duplicate certificates.

Fourth Qualification (RBI): Omission was administrative during leadership rotation phase with no malafide intent. Remedial legal processes active, application for compounding and regularization before RBI submitted. Compliance frameworks upgraded.

Financial Performance Overview (FY 2025-26)

Income Statement Highlights:

  • Interest Income: ₹1,195.83 lakh (FY25: ₹101.88 lakh)
  • Total Income: ₹1,196.92 lakh (FY25: ₹101.88 lakh)
  • Finance Cost: ₹981.47 lakh (FY25: ₹12.71 lakh)
  • Impairment on Financial Instruments: ₹342.38 lakh (FY25: ₹12.94 lakh)
  • Net Loss: ₹142.81 lakh (FY25: Net Profit ₹1.22 lakh)
  • Basic & Diluted EPS: (₹0.14) (FY25: ₹0.00)

Balance Sheet Position (as at March 31, 2026):

  • Total Assets: ₹19,024.51 lakh
  • Financial Assets: ₹18,906.90 lakh (including Loans)
  • Borrowings: ₹17,792.69 lakh
  • Total Liabilities: ₹18,093.46 lakh
  • Equity Share Capital: ₹999.96 lakh
  • Other Equity: ₹931.05 lakh

Cash Flow Statement:

  • Net cash flow from Operating Activities: ₹1,006.83 lakh
  • Net cash used in Investing Activities: (₹7.05) lakh
  • Net cash used in Financing Activities: (₹1,001.04) lakh
  • Net decrease in cash: (₹1.26) lakh
  • Cash and cash equivalents at year end: ₹9.93 lakh

Additional Information

  • Board meeting date: May 26, 2026
  • Results reviewed by Audit Committee and approved by Board
  • Company adopted Indian Accounting Standards (Ind AS)
  • Figures for quarter ended March 31, 2026 are balancing figures between audited full year and published nine-month figures
  • Corporate Identity Number: L65921WB1993PLC057502