Garbi Finvest Limited reported a net loss of ₹81.53 lakh for the quarter ended June 30, 2026, marking a significant deterioration from the profit of ₹118.78 lakh recorded in the same period of the previous fiscal year. The company’s revenue from operations also contracted sharply, falling 28% year-on-year to ₹45.65 lakh, compared to ₹63.36 lakh in Q1FY26.

The Board of Directors approved the unaudited financial results during a meeting held on August 13, 2026. The results were reviewed by statutory auditors Kushal S Poonia & Co., who issued a limited review report with specific qualifications regarding compliance and accounting practices.

Financial Performance

The company’s total income for the quarter stood at ₹98.69 lakh, down from ₹118.62 lakh in Q1FY25. This decline was driven by lower operational revenue and the absence of dividend income, which had contributed ₹5.33 lakh in the prior year. While profit on the sale of investments remained relatively stable at ₹53.04 lakh (versus ₹49.93 lakh previously), it was insufficient to offset the drop in core operations.

Expenses rose significantly to ₹200.18 lakh from ₹77.92 lakh in the previous year’s quarter. The primary driver was depreciation and amortization, which jumped to ₹189.90 lakh from just ₹13.58 lakh. Impairment on financial instruments also increased slightly to ₹9.41 lakh from ₹8.38 lakh.

Auditor Qualifications

The independent auditor’s report highlighted critical non-compliances. Kushal S Poonia & Co. noted that Garbi Finvest has not followed the Expected Credit Loss (ECL) model mandated under Ind AS 109 for financial instruments. Furthermore, the firm stated that the company failed to implement Internal Financial Controls (IFC) as required by the Companies Act, 2013, and lacked necessary control design documentation.

Additionally, the auditors flagged that the company did not account for interest on all loan accounts, raising concerns about the completeness and accuracy of recorded revenue.

What the Numbers Show

The divergence between stable investment gains and collapsing operational revenue highlights a structural weakness in the company’s core business model. With profit on sale of investments contributing over half of total income (₹53.04 lakh against ₹98.69 lakh), the company appears increasingly dependent on capital markets activity rather than its primary non-banking financial activities. This dependency is exacerbated by the sharp rise in depreciation costs, which now consume nearly 95% of total expenses, severely eroding profitability despite modest impairment charges.

Garbi Finvest reported a net loss of ₹279.63 lakh for the financial year ended March 31, 2026 (FY26), a reversal from the net profit of ₹29.95 lakh recorded in FY25. For the quarter ended March 31, 2026 (Q4FY26), the company posted a net loss of ₹509.15 lakh, compared to a profit of ₹18.59 lakh in the preceding quarter. The deterioration in profitability was primarily driven by a surge in total expenses to ₹1,104.20 lakh for the full year, with other expenses accounting for ₹1,051.38 lakh.

The Board of Directors approved the audited financial results at a meeting held on May 29, 2026. The filing was made pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Auditor's Observations

Kushal S. Poonia & Co., Chartered Accountants, issued a qualified opinion on the Ind AS financial statements. The auditors noted that the company did not comply with applicable Indian Accounting Standards (Ind AS) regarding the provisioning and recognition of expected losses and liabilities. In the absence of adequate supporting workings and an appropriate provisioning methodology, the auditors were unable to comment on the adequacy of provisions created or their consequential impact on the financial position.

Additionally, the auditors highlighted that Garbi Finvest, being a Non-Banking Financial Company (NBFC), recognized and calculated interest income based on internal management calculations. No standardized methodology, supporting workings, or system-generated reports were furnished for audit verification, preventing the auditors from commenting on the accuracy and completeness of interest income and related balances.

Emphasis of Matter

The auditors drew attention to several material matters. The company did not furnish loan agreements, sanction documents, or credit appraisal records, making it impossible to verify the compliance, recoverability, and valuation of loans and advances. Confirmations for certain balances under customers and borrowers were only available selectively and were incomplete. Furthermore, detailed salary sheets and payroll records were not provided, hindering the verification of employee benefit expenses and compliance with Ind AS 19.

During the year, the company wrote off a net amount of ₹4,83,595 without providing adequate supporting documents or approvals. The auditors also noted that the company used accounting software lacking an audit trail (edit log) facility, which is a statutory requirement.

Financial Performance

The standalone financial results for the period show a deterioration in profitability. Interest income for FY26 was ₹255.14 lakh, up from ₹235.03 lakh in FY25. Other income stood at ₹211.45 lakh. On the expense side, employee benefit expenses rose to ₹52.77 lakh in FY26 from ₹40.24 lakh in the previous year.

The company's basic and diluted earnings per share (EPS) for FY26 was -3.95, down from 1.18 in FY25.