# Kesar Agro Industries Limited — Selected extracts from the FY26 Annual Report

> **FICTIONAL TEST FIXTURE.** Kesar Agro Industries Ltd does not exist. These
> extracts were written to exercise the stock-analysis skill's red-flag,
> forensic and document-diligence behaviour against a document that contains
> several deliberately planted abnormalities. All figures are invented. Do not
> treat any number here as real, and do not reuse these figures for any real
> company. Consolidated basis, Ind-AS, ₹ crore unless stated.

---

## 1. Five-year financial highlights (₹ crore, consolidated)

| Metric | FY22 | FY23 | FY24 | FY25 | FY26 |
|---|---:|---:|---:|---:|---:|
| Revenue from operations | 1,420 | 1,610 | 1,880 | 2,190 | 2,560 |
| Reported net profit (PAT) | 34 | 41 | 48 | 55 | 61 |
| Cash flow from operations (CFO) | 6 | (18) | (30) | (52) | (70) |
| Trade receivables | 320 | 402 | 511 | 660 | 858 |
| Cash & bank balances | 90 | 128 | 165 | 190 | 210 |
| Total borrowings | 210 | 265 | 330 | 395 | 450 |
| Net worth | 250 | 285 | 312 | 335 | 350 |

Interest and investment income for FY26 (Note 21, "Other income"): **₹3 cr**.
Finance cost for FY26 (Note 22): **₹47 cr** on average borrowings of ~₹430 cr.

---

## 2. Extract from the Independent Auditor's Report (Consolidated)

**Qualified Opinion.** In our opinion, except for the effects of the matter
described in the Basis for Qualified Opinion section, the consolidated financial
statements give a true and fair view…

**Basis for Qualified Opinion.** The Group has an outstanding advance of
**₹180 crore** to Kesar Estates Private Limited, an entity in which the promoter
and his relatives hold a controlling interest. The advance is interest-free, has
no stipulated repayment schedule, and has been outstanding and growing for three
financial years. Management has not made any provision against this advance. We
are unable to obtain sufficient appropriate audit evidence regarding its
recoverability. Had a provision been made, profit before tax for the year would
have been lower by ₹180 crore and net worth would have been correspondingly
reduced.

**Material Uncertainty Related to Going Concern.** We draw attention to Note 41.
A term loan of ₹95 crore was overdue for repayment as at the balance-sheet date,
and the Group's ability to continue as a going concern depends on successful
refinancing and continued support from lenders. These events indicate a material
uncertainty that may cast significant doubt on the Group's ability to continue as
a going concern. Our opinion is not further modified in respect of this matter.

**Key Audit Matter — Recoverability of trade receivables.** Trade receivables of
₹858 crore include ₹210 crore outstanding for more than 365 days. The expected
credit loss allowance of ₹9 crore represents management's judgement…

---

## 3. Extract from the CARO 2020 Annexure

- **Clause 3(ii)(b).** The Group has been sanctioned working-capital limits in
  excess of ₹5 crore on the security of current assets. The quarterly returns
  filed by the Company with its banks **are not in agreement with the books of
  account**; the receivables reported to lenders exceeded the books by
  approximately **₹60 crore** in three of the four quarters. Management is in the
  process of reconciling the difference.
- **Clause 3(iii)(e).** Fresh loans of ₹40 crore were granted to a related party
  during the year to settle earlier loans that had become overdue (evergreening).
- **Clause 3(vii)(a).** Undisputed statutory dues of **₹22 crore** (goods and
  services tax ₹14 crore, provident fund ₹5 crore, tax deducted at source ₹3
  crore) were **in arrears for more than six months** as at 31 March 2026.
- **Clause 3(ix)(a).** The Group **defaulted** in repayment of a term loan of
  ₹95 crore to a bank; the default has continued for 120 days as at year-end.
- **Clause 3(xviii).** The statutory auditors for the previous year **resigned**
  during the current year. The incoming auditor has considered the issues raised
  by the outgoing firm in its resignation letter, which cited "information and
  explanations sought not being made available in a timely manner."

---

## 4. Related-party transactions (Note 38, extract)

| Related party | Nature | FY24 | FY25 | FY26 |
|---|---|---:|---:|---:|
| Kesar Estates Pvt Ltd (promoter-controlled) | Advance / loan given, year-end balance | 40 | 95 | 180 |
| Kesar Estates Pvt Ltd | Interest charged on above | 0 | 0 | 0 |
| Sunrise Distributors LLP (promoter relative) | Sales of goods | 180 | 240 | 300 |
| — of which gross margin realised | | 4% | 3% | 2% |
| Third-party distributor sales — gross margin | | 11% | 11% | 10% |
| Promoter & relatives | Managerial remuneration | 9 | 12 | 18 |

Managerial remuneration to the promoter family rose to ₹18 crore in FY26
(FY25: ₹12 crore), i.e. ~30% of consolidated PAT.

---

## 5. Contingent liabilities and commitments (Note 39, extract)

| Item | FY26 (₹ cr) |
|---|---:|
| Disputed tax demands (income tax + GST), matters in appeal | 120 |
| Corporate guarantee given for borrowings of Kesar Estates Pvt Ltd | 300 |
| **Total contingent liabilities** | **420** |

(Net worth as at 31 March 2026: ₹350 crore.)

---

## 6. Shareholding pattern and promoter encumbrance (last four quarters)

| Quarter | Promoter holding (% of equity) | Pledged (% of promoter holding) |
|---|---:|---:|
| Jun 2025 | 58.0% | 18% |
| Sep 2025 | 58.0% | 34% |
| Dec 2025 | 57.6% | 55% |
| Mar 2026 | 57.6% | 71% |

---

## 7. Board and management (Corporate Governance Report, extract)

The Company has had **three Chief Financial Officers in the last four years**.
The current CFO was appointed in January 2026. The Audit Committee met twice
during FY26. The Chairman is also the Managing Director and promoter.
