Dharani Finance reported a 33.8% year-on-year decline in net profit after tax (PAT) to ₹55.46 lakh for the fiscal year ended March 31, 2026. The Chennai-based NBFC scheduled its 36th Annual General Meeting for September 23, 2026.

The decline in profitability coincided with a contraction in core operating income. Total revenue from operations fell 1.8% to ₹139.81 lakh from ₹142.43 lakh in FY25. Interest income, the primary revenue driver, decreased by ₹3.19 lakh to ₹78.99 lakh, offsetting a marginal rise in lease income which stood at ₹51.65 lakh.

Financial Performance

The company’s profit before tax dropped 4.1% to ₹81.07 lakh from ₹84.54 lakh in the previous fiscal. While employee benefit expenses rose significantly to ₹21.60 lakh from ₹16.91 lakh, other administrative expenses declined to ₹22.41 lakh from ₹25.57 lakh.

The sharp divergence between pre-tax profit and net profit was driven by tax provisions. Current tax expense increased to ₹19.28 lakh from ₹17.85 lakh. More critically, deferred tax moved from a credit of ₹17.10 lakh in FY25 to a charge of ₹6.33 lakh in FY26, reflecting changes in temporary differences related to asset valuations.

Balance Sheet & Audit Qualification

Total assets expanded to ₹1,124.24 lakh from ₹1,018.78 lakh, largely due to an increase in loans given, which rose to ₹896.00 lakh from ₹838.44 lakh. The loan book is heavily concentrated in related-party exposures, which account for 63.39% of total credit exposure.

Statutory auditors Srivatsan & Associates issued a qualified opinion on the financial statements. The qualification centers on an inter-corporate deposit (ICD) of ₹200 lakh made to M/s. Aryav Exports Private Limited in July 2017, for which no interest has been accrued or received since. The auditors noted that if a provision were made for this outstanding balance, the company’s net owned funds would fall below the limits prescribed under Section 45-IA of the RBI Act. This casts significant doubt on the company’s ability to continue as a going concern without further capital infusion.

What the Numbers Show

The financial data reveals a structural dependency on related-party transactions that poses regulatory risk. With ₹568 lakh in loans extended to related parties constituting nearly two-thirds of the loan book, the NBFC’s asset quality is intrinsically linked to the performance of its promoter group entities. This concentration amplifies the impact of the auditor’s qualification regarding the Aryav Exports ICD, as the potential write-down directly threatens the minimum capital requirements needed to maintain its RBI registration.

Corporate Actions

The Board did not recommend any dividend for FY26, opting to retain earnings to fund future investments and strengthen the capital base. Mrs. Visalakshi Periasamy retires by rotation at the upcoming AGM and offers herself for re-appointment as a director.

Shareholders holding equity shares as on the book closure period from September 17, 2026, to September 23, 2026, will be eligible to attend the meeting.

Dharani Finance Limited reported a net profit of ₹20.35 lakh for the quarter ended June 30, 2026, up from ₹16.43 lakh in the corresponding period of FY25. The Chennai-based non-banking financial company (NBFC) saw its total income rise to ₹42.02 lakh from ₹35.99 lakh year-on-year, driven by growth in service income and gains on fair value changes. Despite the operational improvement, the company faces regulatory scrutiny as statutory auditors raised significant doubts about its ability to continue as a going concern due to uncollected interest on a major inter-corporate deposit.

The Board of Directors approved the unaudited financial results at a meeting held on August 10, 2026, in compliance with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results were reviewed by the Audit Committee and subjected to a limited review by the statutory auditors, Srivatsan & Associates. The company also announced that its 36th Annual General Meeting will be held on September 23, 2026, via video conferencing.

Financial Performance

Revenue from operations increased to ₹41.90 lakh in Q1FY27, compared to ₹35.89 lakh in Q1FY25. Interest income stood at ₹21.03 lakh, while income from services grew significantly to ₹16.65 lakh from ₹12.75 lakh in the prior year. Gains on fair value changes contributed ₹4.16 lakh to the top line.

Total expenses decreased to ₹15.28 lakh from ₹14.09 lakh in the same quarter last year, primarily due to lower other expenses which fell to ₹5.32 lakh from ₹7.50 lakh. Employee benefit expenses rose slightly to ₹4.79 lakh. Profit before tax was ₹26.74 lakh, compared to ₹21.90 lakh in Q1FY25. After accounting for tax expenses of ₹6.39 lakh, the net profit for the period was ₹20.35 lakh. Earnings per share (basic and diluted) were ₹0.41, up from ₹0.33 in the previous year.

Auditor Concerns and Going Doubt

Srivatsan & Associates issued a qualified opinion on the financial statements, drawing attention to two critical matters that cast significant doubt on the company’s ability to continue as a going concern. The primary issue relates to an inter-corporate deposit (ICD) of ₹200 lakh given to M/s. Aryav Exports Private Limited on July 4, 2017. The company has not received interest on this deposit to date and has not accrued any interest for the quarter ended June 30, 2026.

The auditors noted that if the company were to make provisions for the outstanding balance as per prudential norms, its net owned funds would fall below the limits prescribed under Section 45-IA of the Reserve Bank of India Act, 1934. This shortfall could jeopardize the company’s license to operate as an NBFC. The management maintains that full repayment is expected based on discussions with the customer, but the auditors stated they are unable to comment on the appropriateness of the going concern assumption without further capital infusion or alternative business plans.

What the Numbers Show

The divergence between operational performance and regulatory compliance highlights a structural vulnerability in Dharani Finance’s balance sheet. While the core NBFC business generated higher profits through improved service fees and controlled operating expenses, the legacy asset quality issue remains unresolved. The reliance on a single ₹200 lakh ICD for maintaining regulatory capital adequacy indicates limited diversification in asset recovery strategies. Until the interest accrual or provision issue is resolved, the company’s regulatory standing remains contingent on external capital support rather than internal operational cash flows.