Neo Infracon Limited has lost its statutory auditor, M/s. D. Kothary & Co., following a failure to agree on audit remuneration. The resignation, effective August 6, 2026, stems from the auditor’s assertion that the professional effort and resources required for auditing a listed entity have increased significantly, necessitating a fee revision that management did not accept. This departure creates an immediate need for the company to appoint a new statutory auditor in accordance with the Companies Act, 2013, and SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

The resignation was communicated to the BSE Limited under Regulation 30 of the SEBI LODR Regulations, 2015. In its intimation, Neo Infracon stated that it has taken note of the resignation and will initiate the process to appoint a replacement. The filing confirms that no other material reasons exist for the resignation beyond the fee dispute, and the auditor did not report any management-imposed limitations on audit evidence or concerns regarding the quality of information provided.

Auditor’s Statement and Compliance

M/s. D. Kothary & Co., Chartered Accountants (Firm Registration Number 105335W), submitted its resignation letter dated August 6, 2026, to the Board of Directors. Partner Mukesh Udaykant Jha signed the letter, stating that discussions with management regarding a revision of audit remuneration failed to yield a mutually acceptable structure. To maintain professional independence and objectivity, the firm deemed it appropriate to step down.

Crucially, the auditor confirmed that it had already issued its Limited Review Report for the quarter ended June 30, 2026, in compliance with paragraph 6.1 of section V-D of Chapter V of the SEBI Master Circular dated July 11, 2023. This ensures that the company’s financial disclosures for Q4FY26 remain valid despite the auditor’s exit.

Key Details of the Resignation

The following table outlines the key details of the auditor’s tenure and resignation as disclosed in the regulatory filing:

D. Kothary & Co. was appointed as statutory auditor under Section 139 of the Companies Act, 2013. The firm’s address is listed as 102, Ameya House, Next to Azad Nagar Metro Station, Andheri West, Mumbai - 400053. The resignation letter explicitly states that there were no issues related to insufficient appropriate audit evidence or lack of information that would significantly impact the financial statements.

What the Numbers Show

The resignation highlights a common friction point in corporate governance: the alignment of audit fees with the increasing complexity and resource demands of statutory audits for listed entities. While D. Kothary & Co. cited rising professional efforts and time commitments as drivers for the requested fee revision, Neo Infracon’s management declined to adjust the remuneration to the auditor’s expectations.

Notably, the auditor completed its limited review for the most recent quarter (ended June 30, 2026) before formalizing the resignation. This suggests that the fee dispute was likely ongoing during the audit process but did not hinder the completion of immediate regulatory filings. However, the abrupt change in mid-term—less than a year after appointment on July 14, 2025—may signal potential challenges in maintaining continuity in audit oversight for FY2026-27. Investors should monitor the timeline for the appointment of the new statutory auditor, as delays could impact future quarterly reviews or annual audit timelines.

Neo Infracon Limited reported a standalone net profit of ₹11.78 lakh for the first quarter ended June 30, 2026 (Q1FY27), down from ₹14.57 lakh in the preceding quarter. The company’s consolidated segment, however, posted a net loss of ₹22.81 lakh, reversing from a net profit of ₹79.13 lakh in Q4FY26. The divergence highlights significant pressure from group-level financing costs and a sharp decline in revenue from operations, which fell to ₹81.80 lakh from ₹206.39 lakh in the previous quarter.

The Board of Directors approved the unaudited standalone and consolidated financial results on August 4, 2026. Statutory Auditors D. Kothary & Co., Chartered Accountants, conducted a limited review of the results pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The audit committee reviewed the figures before board approval. The company operates exclusively in the "Construction Activities" segment.

Consolidated Financial Performance

Consolidated revenue from operations dropped significantly to ₹81.80 lakh in Q1FY27, compared to ₹206.39 lakh in Q4FY26 and ₹279.92 lakh in the same quarter last year. Total income stood at ₹101.27 lakh, including other income of ₹19.47 lakh. Total expenses amounted to ₹119.86 lakh, leading to a pre-tax loss of ₹18.59 lakh. After accounting for tax expenses of ₹4.22 lakh (net of deferred tax benefit), the net loss widened to ₹22.81 lakh.

Standalone Financial Performance

On a standalone basis, Neo Infracon Limited reported revenue from operations of ₹81.80 lakh, down from ₹96.39 lakh in the previous quarter and ₹148.92 lakh in Q1FY26. Total expenses were ₹66.02 lakh, resulting in a profit before tax of ₹15.78 lakh. After tax expenses of ₹4.00 lakh, the standalone net profit for the quarter was ₹11.78 lakh, up from ₹5.49 lakh in the corresponding period last year but down from ₹14.57 lakh in Q4FY26.

What the Numbers Show

The divergence between standalone profitability and consolidated losses underscores the impact of financing costs at the group level. While the standalone entity incurred no finance cost and maintained a healthy margin, the consolidated structure absorbed ₹27.27 lakh in finance costs during the quarter. Additionally, the auditor’s report notes that the Group’s investment in its associate, Nesta Spaces Private Limited, was reduced to NIL due to impairment recognized in FY26. Consequently, no share of the associate’s profit or loss is recognized in the current quarter’s consolidated results, isolating the reported loss to operating and financing activities within the parent and subsidiaries.