Aviva Industries reported a standalone net profit of ₹60.36 lakh for the quarter ended June 30, 2026 (Q1FY27), marking a 35% decline from the ₹92.83 lakh profit recorded in the preceding quarter. While the company returned to profitability from a loss of ₹11.22 lakh in the same period last year, statutory auditors issued a review report with significant "Emphasis of Matter" clauses, highlighting critical verification issues regarding fund utilization, inventory existence, and undocumented advances. These disclosures signal potential governance risks that may impact investor confidence and asset security.

The Board of Directors approved the unaudited financial results on August 11, 2026, in compliance with Regulation 30 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results were prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013. During the quarter, the company converted 79,95,000 warrants into equity shares, raising ₹22.39 crore comprising face value and a share premium of ₹18.00 per share. Paid-up equity share capital increased to ₹3249.90 lakh from ₹2450.40 lakh in the prior quarter.

Financial Performance Overview

The company operates within a single primary segment, "Trading of Agriculture Product," and thus does not have reportable segments under Ind AS 108. Total income remained at ₹3977.49 lakh, with other income negligible at ₹0.00 lakh. Expenses were driven primarily by purchases of stock-in-trade, which stood at ₹4204.95 lakh, offset by a decrease in inventories of ₹325.64 lakh. Employee benefits expenses were minimal at ₹1.68 lakh, while other expenses totaled ₹14.95 lakh. Tax expenses amounted to ₹21.19 lakh, including current tax of ₹21.17 lakh and deferred tax of ₹0.02 lakh.

Auditor Concerns and Monitoring Gaps

Statutory auditors S K Bhavsar & Co issued a review report with significant limitations in their verification process. The auditors stated they could not verify the end-utilization of the ₹22.39 crore raised through warrant conversion because sales and purchase invoices were not made available for full verification. Furthermore, the physical stock/inventory as of June 30, 2026, could not be verified, and no Management Representation Letter confirming its existence was furnished. Consequently, the auditors were unable to comment on the existence and valuation of inventory reflected in the statement.

Additional discrepancies included the inability to obtain confirmations for certain trade receivable and payable balances due to inadequate alternative procedures. Most notably, the company provided interest-free advances aggregating ₹26.10 crore during the quarter without supporting documentation. The auditors expressed an inability to comment on the recoverability and business rationale of these advances. Reliable value and supporting documents for investments were also not presented, forcing reliance on management representations.

What the Numbers Show

The divergence between the substantial capital raise of ₹22.39 crore and the simultaneous extension of ₹26.10 crore in undocumented interest-free advances raises questions about working capital management. While revenue declined by approximately 39% quarter-on-quarter, the company maintained profitability, albeit at reduced levels. The inability of statutory auditors to verify core assets like inventory and receivables suggests a disconnect between reported financial health and verifiable operational data, warranting close scrutiny by investors regarding the quality of earnings and asset security.

Aviva Industries Limited's Board of Directors, at their meeting held on May 14, 2026, approved the audited standalone financial results for the quarter and year ended March 31, 2026, under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results were reviewed by the Audit Committee and subsequently approved by the Board, with statutory auditor M/s. S K Bhavsar & Co. (FRN: 145880W) issuing an audit report with an unmodified opinion for the financial year ended March 31, 2026. Subsequently, pursuant to Regulation 47 of the SEBI (LODR) Regulations, 2015, the company submitted the newspaper publication of its audited financial results for the quarter and financial year ended March 31, 2026 to BSE Limited on May 16, 2026, published in News Hub (English Edition) and News Hub (Marathi Edition). The company's business falls within a single primary segment of trading in agriculture products.

Financial Performance: Full Year and Quarterly Results

The company recorded a significant turnaround in its financial performance for the year ended March 31, 2026. Revenue from operations surged to Rs. 8177.47 lakhs from Rs. 3.19 lakhs in the previous year, while total income (net) stood at Rs. 8177.51 lakhs against Rs. 3.19 lakhs in the prior year. The company reported a net profit of Rs. 187.53 lakhs for the full year, compared to a net loss of Rs. 8.65 lakhs in the year ended March 31, 2025. Total tax expenses for the year were Rs. 69.78 lakhs, comprising current tax of Rs. 69.32 lakhs and tax of earlier years of Rs. 0.45 lakhs.

The following table summarises the key financial metrics for the quarter and year ended March 31, 2026 (Rs. in lakhs):

Balance Sheet Highlights

As at March 31, 2026, total assets stood at Rs. 7,910.15 lakhs, a substantial increase from Rs. 412.80 lakhs as at March 31, 2025. Current assets rose to Rs. 7,522.95 lakhs from Rs. 22.53 lakhs, driven primarily by trade receivables of Rs. 4,322.41 lakhs, loans of Rs. 2,295.30 lakhs, inventories of Rs. 620.51 lakhs, and cash and cash equivalents of Rs. 280.84 lakhs. Total equity increased to Rs. 7,491.27 lakhs from Rs. 302.69 lakhs, with paid-up equity share capital rising to Rs. 2,450.40 lakhs from Rs. 149.90 lakhs and other equity standing at Rs. 4,481.22 lakhs. Reserves excluding revaluation reserves as per the balance sheet stood at Rs. 4,481.22 lakhs as at March 31, 2026.

During the period, the company converted 2,30,05,000 warrants into equity shares upon receipt of ₹64,41,40,000 comprising the face value and a share premium of ₹18.00 per share from each subscriber.

Cash Flow Summary

For the year ended March 31, 2026, net cash used in operating activities was Rs. (6,740.39) lakhs, reflecting a significant increase in working capital requirements including a decrease in receivables of Rs. (4,302.19) lakhs and advances of Rs. (2,295.30) lakhs. Net cash used in investing activities was Rs. (0.28) lakhs. Net cash from financing activities was Rs. 7,020.15 lakhs, supported by share application money receipts of Rs. 2,860.15 lakhs on issue of capital and Rs. 4,140.90 lakhs on account of security premium. Cash and cash equivalents closed at Rs. 280.84 lakhs as at March 31, 2026, compared to Rs. 1.36 lakhs at the beginning of the year.

Proposed Acquisition of Agribullion Ventures

The Board also considered and approved a proposal for the issuance of equity shares on a preferential basis through a Share Swap mechanism for the proposed acquisition of a 90% stake in Agribullion Ventures Private Limited at an indicative valuation of ₹350 Crore. The key details of the proposed transaction are as follows:

Preferential Issue Fund Utilisation

The company reported no deviation or variation in the utilisation of funds raised through multiple tranches of preferential issues during the quarter ended March 31, 2026. All funds raised were stated to have been fully utilised towards meeting working capital requirements. The preferential issue tranches and amounts raised are summarised below:

Auditor's Emphasis of Matters

The statutory auditor, M/s. S K Bhavsar & Co., while issuing an unmodified opinion, drew attention to several matters in the Emphasis of Matters section of the audit report. These included:

• Non-furnishing of balance confirmation letters, party-wise reconciliation statements, and age-wise analysis for certain trade receivable and trade payable balances as at March 31, 2026, making it impossible to ascertain the existence, completeness, accuracy, and recoverability of said balances.
• Absence of satisfactory supporting documents for completeness of valuation of inventory as at March 31, 2026.
• Non-appointment of an Internal Auditor for the entire Financial Year 2025-26, constituting a non-compliance with Section 138 of the Companies Act, 2013.
• Non-disclosure of MSME classification for trade payables, constituting non-compliance with the Micro, Small and Medium Enterprises Development Act, 2006.
• Unconfirmed advances paid to suppliers and loans granted by the company for which confirmations and supporting loan agreements were not made available.
• Non-provision of information and supporting documentation in respect of investments held in the name of the company, preventing verification of existence, ownership, and fair valuation.

The auditor confirmed that the conclusion on the financial results is not modified in respect of any of these matters. All the above matters were communicated to the Board of Directors and the Audit Committee of the company.

Source: None/Company/INE461H01011/fd73a210-e47d-47e8-9589-9397338c7503.pdf