Aplab Ltd’s record is defined by a five-year stretch of qualified audit opinions and adverse internal-control reports that ended only in FY2025. The company carries ₹83 crore in short-term borrowings secured by a blanket charge over all assets, has not generated positive operating cash flow in seven years, and has seen its statutory auditors resign or decline to continue in three of the last four appointment cycles.
Key findings
- Statutory auditors resigned or declined to continue in three of the last four appointment cycles
Major- M/s Shahade & Associates declined re-appointment and were replaced at the AGM on 1 October 2020. M/s Puranik Kane & Co. resigned on 11 August 2023, citing non-payment of audit fees via post-dated cheques and non-payment of Income Tax TDS of Rs. 70,000 for FY2021-22, which resulted in a tax demand on the auditor. M/s R. Bhargava & Associates were appointed at the AGM on 29 September 2023 for a five-year term. - Total borrowings are short-term, secured by a blanket charge, with some deposits pledged
Major- Total borrowings stood at ₹83.47 crore as of FY2025-26, all classified as short-term with zero long-term debt. Working capital borrowings from Union Bank of India are secured by a first charge over all present and future immovable and movable property, plant and equipment, and by hypothecation of all stocks, book debts, and other current assets. Inter-corporate deposits carried interest at 15% p.a. and were secured against the pledge of promoter shares, but the non-current balance is ₹0 as of 31.03.2026. Bank deposits of ₹18.99 lakhs and ₹2.99 lakhs are pledged for bank guarantees. - Promoter entities absorbed over ₹2.2 crore in purchases and service charges in FY21
Major- In FY2020-21, purchases from related enterprises totalled ₹1.24 crore and service, labour, royalty and other charges to related enterprises reached ₹1.51 crore. The auditor’s CARO report stated that documentation for determining arm’s length in connection with related party transactions was not maintained in FY21, FY22, FY23 and FY24. The company’s materiality threshold for RPTs is ₹1,000 crore or 10% of annual consolidated turnover, whichever is lower, and every year from FY20 to FY26 the board declared no material RPTs occurred. - A multi-year stack of disputed tax demands, unpaid employee dues, and unfunded gratuity sits on the balance sheet
Minor- Disputed income tax demands of 4.67 crore and disputed sales tax demands of 3.7 crore were pending as contingent liabilities as at 31 March 2024. The company had not paid salary for FY2016-17 of ₹2,70,078, for FY2018-19 of ₹1,45,367, and for FY2022-23 of ₹3,38,056 as disclosed in the FY2023-24 annual report. The gratuity benefit plan has not been funded for “last many years,” and 27 Labour Court cases related to gratuity dues were outstanding against the company. - Revenue quality is undermined by chronic collection delays, unreconciled receivables, and liquidity damages for project delays
Minor- In FY2025-26 and FY2024-25, recoveries on trade receivables are not always as per agreed credit terms and no interest is collected on the majority of delayed collections. In FY2021-22 and FY2019-20, non-current receivables included bills uncollected over three years, unreconciled balances, and disputed liquidity damages, with no provision made for doubtful debts. The Board stated in FY2020-21 and FY2019-20 that the company was profitable only “on account of sale of one of our excess property sale” and had “not yet made trading profit”. - The deferred-tax stance was reversed in FY25-26, and the P&L has been repeatedly supported by write-backs of old liabilities
Minor- From FY21 through FY24, Aplab did not recognise deferred tax assets on carried-forward losses because of “absence of virtual certainty of future taxable income”; in FY25 and FY26 the company recognised deferred tax assets based on “reasonable certainty supported by future taxable profit projections”. In FY26, Aplab wrote back old outstanding balances of Rs.1.08 crore that were “no longer payable”; in FY25 the write-back was Rs.92.56 lakhs. In FY25, Aplab wrote back provision balances of Rs.1.7 crore that were “no longer required based on updated information and developments”.
What to watch
- Disputed tax demands. Resolution of income tax demands of 4.67 crore and sales tax demands of 3.7 crore pending with authorities as disclosed in the FY2023-24 annual report.
- Labour litigation. Outcome of 27 Labour Court cases for gratuity dues and 10 Sales Tax cases outstanding as disclosed in announcements dated 16 May 2025 and 27 May 2025.
- Partly paid rights shares. Realisation of uncalled amounts on the 1,25,70,000 partly paid rights shares issued during FY2024-25 and FY2025-26, as the balance is to be sought through future calls.
- CWIP at Digha Factory. Completion and capitalisation of CWIP at Digha Factory, which has been under construction with no depreciation charged since at least FY2019-20.
- Promoter shareholding. Any further changes in promoter shareholding or pledge levels following the release of the 25 lakh-share pledge on 10 February 2026.
Bottom line: This is a record of a company that has spent most of the last five years under qualified audit opinions and adverse internal-control assessments, funding itself through short-term debt, promoter support, and rights issues while operating cash flows stayed negative. The FY2025 and FY2026 unqualified opinions mark a clean break from that pattern, but the underlying structure, a fully encumbered asset base, chronic collection delays, and a history of auditor churn, means the quality of the turnaround still rests on execution. Watch the resolution of the disputed tax and labour claims, and whether the uncalled rights-issue capital comes in.