Kothari Industrial Corporation Limited's independent auditor's limited review report for the third quarter of FY26 has raised multiple concerns regarding the company's financial reporting and compliance matters. The review, conducted by Ray & Ray Chartered Accountants for the quarter and nine months ended December 31, 2025, identifies several areas where sufficient audit evidence could not be obtained.

Revenue Recognition Challenges

The auditors highlighted significant concerns regarding revenue recognition, stating they were unable to obtain sufficient appropriate audit evidence for revenue of Rs 118.66 lakhs. Additionally, income and expenditure pertaining to one division have not been accrued, with the amount being presently indeterminable. These issues prevent the auditors from commenting on the consequential impact on the Profit and Loss Statement for the quarter ended December 31, 2025.

Pending Asset Sale Assessment

A significant matter from the previous year remains unresolved. The company had sold its land and plant and machinery located in its Ennore factory to Coromandel International Limited, but the final assessment outcome is still pending.

Compliance and Legal Issues

The review report identifies several compliance-related concerns that could impact the company's financial position. TDS defaults totaling Rs 0.77 lakhs remain outstanding across multiple financial years, including FY 2022-23, FY 2024-25, and FY 2025-26 up to Q3.

The company is also facing legal proceedings initiated by the Collector of Nilgiris for repossession of certain land plots in Coonoor earmarked for public use. The company has challenged this through a Write Petition filed before the Madras High Court, with the matter still pending adjudication.

Consolidated Results Impact

The consolidated financial results include significant losses from associate companies. The group's share of net loss after tax from associate Phoenix Kothari Footwear Limited and its subsidiaries amounts to Rs 2257.01 lakhs for the quarter ended December 31, 2025, and Rs 2309.07 lakhs for the nine months ended December 31, 2025.

Labour Code Implementation

The auditors noted that while the Government of India's four new Labour codes became effective from November 21, 2025, the supporting final rules are yet to be notified. The company has not considered the potential impact of increased employee benefit obligations in its interim financial results for Q3FY26 and is currently evaluating the potential impact for recognition in the financial results for the quarter and year ending March 31, 2026.

The review report, signed by Partner Swetha Srinivasan of Ray & Ray Chartered Accountants on February 14, 2026, emphasizes that these matters do not modify the auditor's overall conclusion but highlight areas requiring management attention and resolution.

Kothari Industrial Corporation Limited has formally notified BSE Limited of an upcoming board meeting scheduled for February 14, 2026, to consider the delisting of its equity shares from the Calcutta Stock Exchange (CSE). The announcement, made on February 6, 2026, follows the mandatory disclosure requirements under SEBI regulations.

Board Meeting Details

The board meeting will convene at the company's registered office, providing directors with the opportunity to deliberate on this significant corporate decision. The meeting parameters are outlined below:

Regulatory Compliance

The intimation has been made pursuant to Regulation 29 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. This regulation mandates listed companies to provide advance notice to stock exchanges regarding board meetings that may consider material corporate actions.

Corporate Communication

The formal communication was digitally signed by Anil Kumar Padhiali, Company Secretary and Compliance Officer, on February 6, 2026, at 14:05:48 +05'30'. The notification was addressed to BSE Limited at Phirozee Jeejeebhoy Towers, Dalal Street, Mumbai, referencing the company's BSE scrip codes KOTIC and 509732.

Next Steps

The board will convene as scheduled to evaluate the proposed delisting from CSE. Such corporate actions typically require careful consideration of various factors including regulatory requirements, shareholder interests, and strategic business objectives. The outcome of this board meeting will determine the company's future listing status on the Calcutta Stock Exchange.