Independent Auditor's Report on Audited Annual Financial Results
Auditor's Opinion and Key Findings
Date of Communication: 29/05/2025
Nature of Document: Independent Auditor's Report submitted pursuant to Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Auditors H.B. Kalaria & Associates issued an adverse opinion on the company's Indian Accounting Standards (Ind AS) financial statements for the year ended March 31, 2025. The auditors concluded that the financial statements:
- Are presented in accordance with Regulation 33 requirements
- Do NOT give a true and fair view in conformity with Ind AS recognition and measurement principles
Basis for Adverse Opinion
The adverse opinion is based on multiple material uncertainties and limitations:
1. Going Concern Uncertainty:
- Company has defaulted in repayment of loans and payment of statutory dues (including CSR)
- Despite these defaults, the company continues to prepare financial statements on a going concern basis, which contradicts Ind AS 1 requirements
- Corporate Insolvency Resolution Process (CIRP) proceedings were initiated against the company by NCLT, Ahmedabad bench effective January 11, 2023
- NCLAT granted a stay on January 25, 2023, ordering payment of ₹1,21,82,419 within two weeks
- The matter was resolved via settlement agreement dated May 9, 2024, acknowledged by NCLT Principal Bench on July 2, 2024
2. Audit Limitations:
- Company did not carry out balance confirmations and reconciliations with debtors, creditors, and advances
- No physical inspection of inventories was conducted for the period under review
- No physical inspection of property, plant and equipment was conducted
- Company did not perform impairment assessment of property, plant, equipment, inventories, advances, cash, bank balances, and debtors
Financial Results Performance
Year Ended March 31, 2025 (Audited):
- Total Income: ₹255.40 lakhs (Previous Year: ₹1,510.89 lakhs)
- Total Expenses: ₹2,356.59 lakhs
- Net Loss: ₹(2,107.50) lakhs (Previous Year: ₹(958.48) lakhs)
- Basic EPS: ₹(0.98) (Previous Year: ₹(0.45))
- Other Equity: ₹405.87 lakhs (Previous Year: ₹2,507.08 lakhs)
Quarter Ended March 31, 2025 (Audited):
- Total Income: ₹2.40 lakhs
- Net Loss: ₹(432.06) lakhs
- Basic EPS: ₹(0.20)
One-Time Settlement Failure
The company accepted a one-time settlement (OTS) with Union Bank of India for secured loans vide letter dated February 24, 2025:
- Made first installment payment of ₹242.50 lakhs
- Failed to make second installment of ₹376.25 lakhs due within 15 days from OTS acknowledgement date
- Failed to make final installment of ₹1,856.25 lakhs due on March 31, 2025
Additional Notes
- Operations fall under a single segment "Solvent Products"
- Loss in current period includes inventory write-off of ₹400.52 lakhs (PY: nil)
- Company withdrew its Rights Issue on August 25, 2023 due to lack of investor interest
- Company is exploring avenues to mitigate current circumstances