Dharani Sugars Reports ₹10,472 Lakh Net Loss for FY26
Dharani Sugars and Chemicals Limited reported a standalone net loss of ₹10,472.07 lakhs for FY26, widening from ₹9,299.53 lakhs in FY25, as all manufacturing facilities remained non-operational. Total income from operations was ₹241.33 lakhs, while total expenses stood at ₹4,609.16 lakhs. Statutory auditors issued a qualified opinion, citing material uncertainties regarding the company's ability to continue as a going concern due to accumulated losses and defaults on financial obligations.
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Dharani Sugars and Chemicals Limited reported its standalone audited financial results for the quarter and year ended March 31, 2026, at a Board of Directors meeting held on May 16, 2026. The company posted a net loss of ₹10,472.07 lakhs for the full year, widening from a net loss of ₹9,299.53 lakhs in the corresponding previous year, as its manufacturing facilities across all three business segments — Sugar, Distillery, and Power — remained non-operational throughout the year. Statutory auditors Srivatsan & Associates (FRN: 014921S) issued a qualified opinion on the standalone financial statements, citing multiple material uncertainties.
Financial Performance Overview
The company's total income from operations for the year ended March 31, 2026 was ₹241.33 lakhs, entirely comprising other operating income, compared to ₹71.52 lakhs in the year ended March 31, 2025. All three business segments — Sugar, Distillery, and Power — reported nil revenue, with the entire income classified under the unallocated segment. Total expenses for the year stood at ₹4,609.16 lakhs against ₹4,371.20 lakhs in the prior year.
The following table summarises the key financial metrics for the year and the most recent quarter:
| Metric: | Q4 FY26 (Audited) | Q3 FY26 (Unaudited) | Q4 FY25 (Audited) | FY26 (Audited) | FY25 (Audited) |
|---|---|---|---|---|---|
| Total Income from Operations (₹ lakhs): | 24.29 | 17.25 | 17.27 | 241.33 | 71.52 |
| Employee Benefits Expense (₹ lakhs): | 600.69 | 364.89 | 278.89 | 1,732.02 | 1,114.16 |
| Depreciation & Amortisation (₹ lakhs): | 549.76 | 549.76 | 552.63 | 2,199.05 | 2,209.89 |
| Other Expenses (₹ lakhs): | 90.69 | 177.00 | 502.67 | 678.09 | 1,047.15 |
| Total Expenses (₹ lakhs): | 1,241.14 | 1,091.65 | 1,334.19 | 4,609.16 | 4,371.20 |
| Finance Costs (₹ lakhs): | 997.85 | 953.79 | 2,020.00 | 3,908.68 | 4,192.15 |
| Exceptional Items (₹ lakhs): | (2,195.56) | — | (141.23) | (2,195.56) | (807.70) |
| Net Loss (₹ lakhs): | (4,410.26) | (2,028.19) | (3,478.15) | (10,472.07) | (9,299.53) |
| Basic EPS — After Extraordinary Items (₹): | (5.33) | (4.89) | (9.20) | (25.23) | (24.60) |
Balance Sheet and Liquidity Position
As at March 31, 2026, total assets stood at ₹44,866.36 lakhs, declining from ₹47,110.60 lakhs as at March 31, 2025. The company's total equity turned deeply negative at ₹(26,283.67) lakhs, compared to ₹(16,328.14) lakhs in the prior year, reflecting the continued erosion of net worth. Total liabilities rose to ₹71,150.03 lakhs from ₹63,438.74 lakhs. Cash and cash equivalents at the end of the year stood at ₹13.50 lakhs, down from ₹20.62 lakhs at the start of the year.
| Balance Sheet Item: | March 31, 2026 (₹ lakhs) | March 31, 2025 (₹ lakhs) |
|---|---|---|
| Total Non-Current Assets: | 44,077.20 | 46,384.69 |
| Total Current Assets: | 789.16 | 725.91 |
| Total Assets: | 44,866.36 | 47,110.60 |
| Total Equity: | (26,283.67) | (16,328.14) |
| Total Non-Current Liabilities: | 43,723.91 | 41,601.67 |
| Total Current Liabilities: | 27,426.12 | 21,837.07 |
| Total Liabilities: | 71,150.03 | 63,438.74 |
Segment Performance
All three operating segments reported losses before tax and finance costs for both the quarter and the full year. The Sugar segment recorded the largest segment loss at ₹(3,247.03) lakhs for FY26, followed by the Distillery segment at ₹(862.80) lakhs and the Power segment at ₹(499.33) lakhs. Segment assets and liabilities are detailed below:
| Segment: | Assets — FY26 (₹ lakhs) | Liabilities — FY26 (₹ lakhs) | Capital Employed — FY26 (₹ lakhs) |
|---|---|---|---|
| Sugar: | 28,346.51 | 58,248.07 | 14,023.69 |
| Distillery: | 7,960.91 | 2,872.80 | 7,960.91 |
| Power: | 8,461.23 | 10,029.15 | 5,504.88 |
| Unallocated Corporate: | 97.71 | — | 97.71 |
| Total: | 44,866.36 | 71,150.02 | 27,587.19 |
Audit Qualifications and Key Risks
Srivatsan & Associates issued a qualified opinion on the standalone financial statements, raising eight significant qualifications. The auditors highlighted a material uncertainty regarding the company's ability to continue as a going concern, given accumulated losses, non-operational manufacturing plants, and defaults on multiple financial obligations.
Key qualifications and disclosures include:
- MRA Default: The company breached repayment obligations and financial covenants under the Master Restructuring Agreement (MRA) dated May 24, 2024 with India Debt Resolution Company Limited (IDRCL), acting as trustee for National Asset Reconstruction Company Limited (NARCL). IDRCL issued a Default Notice dated February 07, 2026, and the restructuring arrangement stands cancelled, though the lender had not recalled the loan as of the audit report date. Unsustainable debt of INR 33,465 Lakhs continues to be disclosed as contingent liability.
- SDF OTS Cancellation: The Sugar Development Fund (SDF) loan One Time Settlement (OTS) sanctioned for INR 6,111 Lakhs was revoked after the company defaulted on repayment by the extended deadline of April 06, 2026. Original liabilities, including applicable interest and charges, have become repayable.
- Interest Not Provided: Interest on borrowings from directors and inter-corporate loans from related parties — with total outstanding of INR 21,410.18 Lakhs as at March 31, 2026 — has not been accrued, resulting in an understatement of finance costs and current liabilities.
- Farmer Dues Unpaid: The second and final instalment of INR 36.08 Crores payable to sugarcane farmers (Ryots) under the restructuring framework remained unpaid as at March 31, 2026.
- Loan Default — I Heart Properties: The company defaulted on repayment of a loan from I Heart Properties Private Limited; the total outstanding as at March 31, 2026 was INR 2,863.19 Lakhs, including accrued interest of INR 393.19 Lakhs.
- Investment Valuation: The carrying value of investment in Appu Hotels Limited at INR 1,455.39 Lakhs is, in the auditors' opinion, not reflective of fair value as per IND AS 113.
- Balance Confirmations Not Received: Balance confirmations for trade receivables, trade payables, advances, and deposits as at March 31, 2026 were not provided.
- Trading Suspension: Equity shares of the company remain suspended from trading on NSE and BSE with effect from July 03, 2023.
Board Decisions and Corporate Actions
At the Board meeting held on May 16, 2026, the following key decisions were taken in addition to the approval of audited financial results:
| Decision: | Details: |
|---|---|
| Internal Auditor (Re-appointed): | M/S Srinivasan & Shankar Chartered Accountants, Chennai (Firm Regn No 005093S) for FY 2026-27 |
| Cost Auditor (Re-appointed): | M/s SRR & Associates, Cost Accountants, Chennai (Firm Regn. No. 000992) for FY 2026-27 |
| Scrutinizer (Appointed): | M Damodaran & Associates LLP, Chennai (Firm No. L2019TN006000) for the 39th AGM e-voting process |
| Director (Re-appointment proposed): | Mrs Visalakshi Periasamy (DIN: 00064517), subject to shareholder approval at the ensuing AGM |
| 39th Annual General Meeting: | Scheduled during the 4th week of September 2026 via Video Conference/OAVM |
The company was admitted into the Corporate Insolvency Resolution Process (CIRP) on July 29, 2021, and subsequently ordered into liquidation by the NCLT Chennai Bench on June 27, 2023. Following a Supreme Court order dated March 18, 2024 setting aside the liquidation order, the NCLT permitted withdrawal of CIRP proceedings under Section 12A of the Insolvency and Bankruptcy Code, 2016 vide order dated May 09, 2024. The financial statements for the year ended March 31, 2026 have been prepared on a going concern basis, with management citing ongoing revival and recommencement plans, including maintenance works at all three units and discussions with lenders and other stakeholders for restructuring and funding arrangements.
Given that IDRCL has cancelled the Master Restructuring Agreement and issued a Default Notice, what is the likelihood of NARCL recalling the ₹33,465 lakhs loan, and how would a formal recall impact the company's already negative equity position?
With the SDF OTS cancelled due to missed deadlines and all three manufacturing units remaining non-operational, what realistic timeline and funding sources could enable Dharani Sugars to recommence production before further asset deterioration makes revival economically unviable?
How might the unaccrued interest on ₹21,410.18 lakhs in director and related-party loans affect the company's true financial position, and could formal recognition of these liabilities trigger additional regulatory or legal consequences?
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