IL&FS Engineering and Construction Company Limited reported mixed financial performance for the quarter ended December 31, 2025, posting a net profit while continuing to navigate ongoing resolution proceedings under the National Company Law Appellate Tribunal (NCLAT).

Financial Performance Overview

The company achieved a quarterly turnaround with a net profit of ₹166 lakhs for Q3 FY26, compared to a loss of ₹177 lakhs in the previous quarter and a profit of ₹150 lakhs in the corresponding quarter of FY25.

Nine-Month Performance Analysis

For the nine months ended December 31, 2025, the company reported a net loss of ₹953 lakhs compared to ₹1,227 lakhs loss in the corresponding period of FY25. Revenue from operations declined significantly to ₹15,811 lakhs from ₹21,932 lakhs in the previous year.

Operational Challenges and Resolution Process

The company continues to face significant operational challenges with accumulated losses of ₹3,60,990 lakhs as of December 31, 2025. Current liabilities exceed current assets by ₹3,84,836 lakhs, indicating severe liquidity constraints. The company operates under the NCLAT resolution framework, which established October 15, 2018, as the cut-off date for crystallization of claims.

Key Financial Highlights

Expense Management:

• Total expenses decreased to ₹6,788 lakhs in Q3 FY26 from ₹7,406 lakhs in Q3 FY25
• Construction expenses remained substantial at ₹3,939 lakhs
• Employee benefits expense stood at ₹988 lakhs

Exceptional Items: The company recorded exceptional income of ₹175 lakhs in Q3 FY26, related to provisions for additional retirement benefit liabilities under the new Labour Codes effective from November 21, 2025.

Compliance and Regulatory Matters

The company initially faced compliance issues with BSE regarding the submission of quarterly results in PDF format, which were subsequently resolved. The financial results received acknowledgment from BSE with transaction numbers 0502202604221727 and 0502202604251727.

Auditor's Observations

The independent auditors highlighted material uncertainties regarding the company's going concern status, ongoing investigations by regulatory agencies including SFIO and ED, and non-recognition of interest expenses totaling ₹34,546 lakhs for the nine-month period. The aggregate unrecognized interest expense as of December 31, 2025, amounts to approximately ₹2,96,535 lakhs.

Resolution Process Status

The company remains categorized under "Red" group by IL&FS's reconstituted board, indicating inability to meet contractual and debt obligations. A consortium bid for acquiring equity stake has been approved by the Committee of Creditors and awaits approval from Justice D.K. Jain (Retd.) before submission to NCLT.

IL&FS Engineering and Construction Company Limited has disclosed substantial defaults on loan repayments and interest payments to banks and financial institutions as of December 31, 2025. The company submitted this disclosure to both BSE Limited and National Stock Exchange of India Ltd on January 5, 2026, in compliance with SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2019/140 dated November 21, 2019.

Financial Indebtedness Overview

The company's financial position reveals significant stress across its loan portfolio. The disclosure provides a comprehensive breakdown of the company's outstanding obligations and defaults across different categories of financial instruments.

Loan Defaults and Outstanding Amounts

The most striking aspect of the disclosure is that the default amount of ₹2,727.72 crores exceeds the total outstanding amount of ₹2,627.72 crores from banks and financial institutions. This indicates the severity of the company's financial distress and the accumulation of unpaid obligations over time.

Regarding unlisted debt securities, including Non-Convertible Debentures (NCDs) and Non-Convertible Redeemable Preference Shares (NCRPS), the company reported nil amounts for both total outstanding and defaults in this category.

Regulatory Context and Interest Provisions

The company has provided an important clarification regarding interest calculations. No interest is being accrued or provided post the cutoff date, which was defined in the National Company Law Appellate Tribunal order dated March 12, 2020. The only exception to this policy is interest on Funded Interest Term Loan (FITL), which continues to be calculated.

Compliance and Disclosure

The disclosure was signed by Rajib Kumar Routray, Company Secretary and Compliance Officer, and submitted to both major stock exchanges where the company's shares are listed. The formal communication was addressed to BSE Limited at Phiroze Jeejeehoy Towers, Dalal Street, Mumbai and National Stock Exchange of India Ltd at Exchange Plaza, Bandra-Kurla Complex, Mumbai.

This regulatory filing underscores the ongoing financial challenges faced by IL&FS Engineering and Construction Company Limited, with total financial indebtedness reaching ₹3,097.28 crores as of December 31, 2025.