IGC Industries Limited , a company listed on the Bombay Stock Exchange (BSE), announced on August 14, 2025, that its statutory auditors, ADV & Associates, have submitted their resignation. This unexpected development comes amidst significant financial concerns raised in the auditor's review report.

Auditor Resignation Details

ADV & Associates, appointed on September 29, 2022, were originally scheduled to serve until the conclusion of IGC Industries' 41st Annual General Meeting in 2027. However, their tenure has been cut short by this sudden resignation. Prior to their departure, the auditing firm had completed the audit report for the financial year ending March 31, 2025, and the limited review report for the quarter ending June 30, 2025.

Financial Concerns Highlighted

The resignation letter from ADV & Associates, which was attached to the company's disclosure, revealed several alarming issues:

1. Rights Issue Proceeds: Out of the ₹42.22 crores raised through a Rights Issue, advances of ₹20.72 crores were given to various suppliers without proper documentation or purchase orders.

2. Unexplained Payment: A substantial payment of ₹20.00 crores was made to CNX Corporation Limited without any supporting documents or evidence of services rendered.

3. Misuse of Funds: The utilization of the Rights Issue proceeds deviated significantly from the stated objectives in the Offer Letter filed with the Stock Exchange.

4. Potential Rule Violations: The company appears to have accepted deposits totaling ₹41.53 crores from various individuals, potentially contravening the Companies (Acceptance of Deposits) Rules, 2014.

5. Going Concern Issues: The auditors raised substantial doubts about the company's ability to continue as a going concern, citing continuous losses in all four quarters of the financial year 2024-25 and the previous financial year 2023-24.

Financial Performance

The unaudited financial results for the quarter ended June 30, 2025, paint a grim picture of the company's financial health:

Management Response

IGC Industries Limited stated that detailed reasons for the auditors' resignation are provided in the attached resignation letter. The company confirmed that there are no other material reasons beyond those disclosed. Notably, the auditors indicated that no concerns were raised prior to the resignation and that no information requests were denied by the management.

Market Implications

This development raises serious questions about IGC Industries Limited's financial management and corporate governance practices. Investors and regulatory bodies are likely to scrutinize the company's operations and financial statements more closely in the coming days.

The resignation of statutory auditors, especially when accompanied by such significant financial concerns, often leads to increased market volatility for the company's stock. Shareholders and potential investors are advised to exercise caution and seek professional advice before making any investment decisions related to IGC Industries Limited.

As the situation unfolds, it remains to be seen how the company will address these issues and what steps regulatory authorities might take in response to the auditors' findings.

IGC Industries Limited , formerly known as IGC Foils Limited, is facing significant financial challenges and regulatory scrutiny following the resignation of its statutory auditors and the release of its latest financial results.

Auditor Resignation and Disclaimer of Opinion

In a major development, M/s ADV & Associates, the statutory auditors of IGC Industries, submitted their resignation on August 14, 2025. This resignation comes on the heels of their disclaimer of opinion on the company's financial results for the quarter ended June 30, 2025.

The auditors cited several material concerns that prevented them from forming a basis for their review conclusion:

1. Questionable Rights Issue Proceeds: Out of the ₹42.22 crore raised through a rights issue, advances amounting to ₹20.72 crore were given to various suppliers without proper documentation.

2. Unexplained Payment: A payment of ₹20.00 crore was made to CNX Corporation Limited without supporting documents or evidence of services received.

3. Misuse of Funds: The utilization of the rights issue proceeds was not in line with the objectives stated in the offer letter filed with the stock exchange.

4. Potential Rule Violations: The company accepted ₹41.53 crore from various individuals, which may contravene the Companies (Acceptance of Deposits) Rules, 2014.

5. Going Concern Issues: Continuous losses across all quarters in financial years 2024-25 and 2023-24 raise substantial doubt about the company's ability to continue as a going concern.

Financial Performance

The financial results for the quarter ended June 30, 2025, paint a grim picture of the company's performance:

The company reported zero revenue from operations and a marginal loss for the quarter ended June 30, 2025. This follows a pattern of poor financial performance, with the company reporting a net loss of ₹6.17 crore for the financial year 2024-25.

Rights Issue and Capital Structure

IGC Industries completed a rights issue on November 22, 2024, issuing 3,24,80,000 equity shares at ₹13.00 per share (including a premium of ₹3.00 per share). This increased the company's paid-up equity share capital to ₹3,472.00 crore as of March 31, 2025, up from ₹224.00 crore in the previous year.

Regulatory Implications

The resignation of the auditors and the disclaimer of opinion on the financial results are likely to attract regulatory attention. The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs may scrutinize the company's financial dealings, particularly the utilization of rights issue proceeds and the potential violations of deposit rules.

Investors and stakeholders of IGC Industries Limited should closely monitor further developments as the company navigates through these financial and regulatory challenges. The company's ability to address the auditors' concerns and improve its financial position will be crucial for its future prospects.