Valecha Engineering Posts FY26 Loss Amid Subsidiary Challenges

Nature of the Disclosure

Regulatory filing pursuant to Regulation 30 & 33 of the SEBI (LODR) Regulations, 2015, containing the Audited Standalone and Consolidated Financial Results for the fourth quarter and financial year ended 31 March 2026, as approved by the Board of Directors in a meeting held on 05 June 2026. The Statutory Auditors, M/s. Jain Jagavat Kamdar & Co., have issued an unmodified audit report.

Key Quantitative Figures (Standalone - FY26)

• Total Income: ₹29.43 Crores (Year), ₹2.74 Crores (Q4)
• Total Expenses: ₹23.76 Crores (Year), ₹8.26 Crores (Q4)
• Profit/(Loss) Before Exceptional Items & Tax: ₹5.67 Crores (Year), ₹(5.52) Crores (Q4)
• Exceptional Items (Net): ₹433.62 Crores gain (Year), ₹(3.91) Crores loss (Q4). See notes for breakdown.
• Profit/(Loss) Before Tax: ₹439.54 Crores (Year), ₹(9.43) Crores (Q4)
• Tax Expense: ₹0.00 Crores (Current & Deferred for both periods)
• Profit/(Loss) for the Period: ₹439.54 Crores (Year), ₹(9.43) Crores (Q4)
• Total Comprehensive Income: ₹439.59 Crores (Year), ₹(9.34) Crores (Q4)
• Paid-up Equity Share Capital: ₹22.53 Crores
• Other Equity: ₹426.21 Crores
• Earnings Per Share (Basic/Diluted): Not annualized/calculated for the period due to the nature of exceptional items.

Key Quantitative Figures (Consolidated - FY26)

• Total Income: ₹35.55 Crores (Year), ₹5.97 Crores (Q4)
• Total Expenses: ₹260.71 Crores (Year), ₹95.56 Crores (Q4)
• Profit/(Loss) Before Exceptional Items & Tax: ₹(225.16) Crores (Year), ₹(89.59) Crores (Q4)
• Exceptional Items (Net): ₹(3.82) Crores loss (Year & Q4)
• Profit/(Loss) Before Tax: ₹(228.98) Crores (Year), ₹(93.41) Crores (Q4)
• Tax Expense: ₹0.01 Crores (Current Tax for Year), ₹(3.77) Crores (Deferred Tax for Year); ₹0.00 for Q4
• Profit/(Loss) for the Period: ₹(228.98) Crores (Year), ₹(93.41) Crores (Q4)
• Total Comprehensive Income: ₹(228.89) Crores (Year), ₹(93.32) Crores (Q4)
• Net Loss Attributable to Shareholders of Co.: ₹(148.33) Crores (Year), ₹(72.78) Crores (Q4)
• Paid-up Equity Share Capital: ₹22.53 Crores
• Other Equity: ₹(1,718.43) Crores
• Earnings Per Share (Basic/Diluted): ₹(101.63) (Year), ₹(41.46) (Q4)

Dates of Action

• Board Meeting: 05 June 2026 (Commencement: 4:00 PM)
• Period Ended: 31 March 2026
• Audit Report Date: 05 June 2026
• Income Tax Appeal Filed: 19 April 2026

Parties Involved

• Statutory Auditors: M/s. Jain Jagavat Kamdar & Co., Chartered Accountants (Firm Regn. No. 122530W)
• Subsidiaries Mentioned: Valecha Infrastructure Ltd., Professional Realtors Pvt. Ltd., Valecha International FZE, Valecha Kachchh Toll Roads Ltd. (VKTRL), Valecha Reality Ltd., Valecha Badwani Sendhwa Tollways Ltd. (VBSTL).
• Regulators: SEBI, NCLT Mumbai Bench, Income Tax Department.
• Banks/Lenders: Canara Bank (mentioned in context of appropriated tax refund).
• Key Personnel: Shashikant Gangadhar Bhoge (Chairman), Vijaykumar Himatlal Modi (Company Secretary & Legal).

Purpose / Stated Rationale

The disclosure is a mandatory regulatory filing to inform the stock exchanges about the company's audited financial performance for the specified period and the outcomes of the Board meeting.

Financial or Operational Impact (Explicitly Disclosed)

• Exceptional Items (Standalone): A net gain of ₹433.62 Cr for FY26 includes write-backs and adjustments from the implementation of the Resolution Plan. A net loss of ₹3.91 Cr for Q4 includes:
• Write-off of assets (₹5.95 Cr) including receivables from Govt. authorities (₹20.46 Cr) and Tato Menchuka Project (₹5.69 Cr).
• Write-back of liabilities (₹6.20 Cr) including statutory dues (₹4.86 Cr) and Tato Menchuka payables (₹5.53 Cr).
• Provision for diminution in value of investments in subsidiaries (₹1.88 Cr).
• Expected Credit Loss (ECL) on trade receivables (₹2.28 Cr).
• Impairment/Provisioning: Significant investments in and loans to subsidiaries (₹0.31 Cr + ₹169.04 Cr) are carried at book value pending detailed recoverability assessment. Impairment of ₹1.88 Cr recognized in three subsidiaries.
• Tax Demand: Received an income tax demand of ₹191.23 Cr for AY 2024-25, which has been appealed. Management believes it is not sustainable.
• Going Concern: Several subsidiaries (VRL, VIL, PRPL) are not considered going concerns. Assets have been stated at realizable value and provisions made.
• Cash Flow: Net decrease in Cash & Cash Equivalents of ₹6.55 Cr for FY26 (Standalone).

Capital Structure Impact

• Paid-up Equity Share Capital remained unchanged at ₹22.53 Crores.
• Instruments entirely equity in nature decreased from ₹35.65 Cr to ₹25.00 Cr.
• Other Equity decreased from ₹456.57 Cr to ₹426.21 Cr (Standalone).

Cash Flow Implications (Explicitly Disclosed)

• Standalone Cash Flow (FY26):
• Net Cash from Operating Activities: ₹3.11 Cr
• Net Cash from Investing Activities: ₹1.91 Cr
• Net Cash used in Financing Activities: ₹(11.57) Cr (primarily from repayment of instruments entirely equity in nature: ₹(10.65) Cr)
• Funds received from the Successful Resolution Applicant (SRA) under the Resolution Plan are intended for settling specific undistributed pending payables.

Forward-Looking Guidance or Management Commentary

• No explicit financial guidance or outlook provided.
• Management commentary is limited to legal assessments (e.g., belief that the income tax demand is not sustainable, expectation of a favourable outcome from CIT(A)).
• The impact of newly notified Labour Codes is yet to be evaluated by the new management.

Material Changes / Comparisons

• Standalone Net Profit: Shift from a profit of ₹1.76 Cr in FY25 to a loss of ₹9.43 Cr in FY26.
• Consolidated Net Loss: Increased significantly from a profit of ₹228.37 Cr in FY25 to a loss of ₹228.98 Cr in FY26. The FY25 profit was largely due to exceptional gains from the Resolution Plan.
• Exceptional Items: FY25 included a large net gain (₹433.62 Cr) related to the Resolution Plan. FY26/Q4 include net losses from ongoing clean-up activities.
• Subsidiary VLMTPL: Dissolved as of 03-Nov-2025, leading to write-back of provisions.

Undistributed Pending Payables

As of 31-Mar-2026, the company has undistributed pending payables of ₹3.68 Crores, comprising:

• Gratuity: ₹0.98 Cr (Provision made for ₹0.55 Cr)
• EPFO dues: ₹2.66 Cr (No provision made)
• Other contingencies: ₹0.04 Cr (No provision made)
• Fixed Deposit holders: ₹0.00 Cr* (₹18,115) (Provision made)

These are expected to be settled from funds received from the Successful Resolution Applicant.

Auditor's Emphasis of Matter

The auditors highlighted several key areas of attention in their report, including:

1. VKTRL's CIRP: Investment (₹39.84 Cr) and loans (₹76.36 Cr) carried at book value pending CIRP outcome. No impairment recognized yet.

2. Subsidiary Investments/Loans: Diminution of ₹1.88 Cr recognized in three subsidiaries. Significant balances (₹0.31 Cr + ₹169.04 Cr) carried at book value pending recoverability assessment and ECL evaluation.

3. Resolution Plan Adjustments: Write-off of pre-CIRP receivables (₹20.46 Cr) and net write-back of liabilities (₹3.67 Cr) accounted through Capital Reserve.

4. Recoverability Assessment: ECL not evaluated on trade receivables (₹136.18 Cr + ₹4.90 Cr retention) and various loans/advances (₹6.50 Cr + ₹5.03 Cr + ₹21.36 Cr).

5. Canara Bank Refund: Receivable of ₹15.41 Cr recognized with a corresponding liability to Financial Creditors. No P&L impact.

6. Goodwill Impairment: Goodwill on consolidation of ₹1.80 Cr written off during the quarter.

7. Income Tax Refund: Interest of ₹6.07 Cr recognized in Q2 FY26 subsequently refunded to government in Q4 FY26 and reversed through Other Income.

8. Income Tax Demand: ₹191.23 Cr demand contested; management expects favourable outcome.

9. Joint Ventures: Results of only 6 out of 15 JVs included in consolidation for the period.