Coromandel Engineering Company Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

Coromandel Engineering's audit opinion improved from qualified in FY2024 to clean by FY2026, but the clean opinion now sits atop a growing stack of auditor call-outs covering unpaid statutory dues, MSME payables, and loan-servicing lapses. The company has also sought approval for large related-party construction contracts with promoter-linked entities, carries a multi-year GST dispute stack, and has seen its net worth flip from negative to positive through a capital restructuring. Operating cash flow has been negative in three of the last four reported years, and control of the company changed twice in three years.

Key findings

  1. Audit opinion turned clean, but the call-outs keep stacking up Major - The statutory auditor issued a qualified opinion for FY2023-24, citing non-payment of dues to financial institutions of ₹2.07 crore and delays in statutory payments. By FY2025-26, the opinion was unqualified, but the report carried Emphasis of Matter paragraphs, special call-outs that do not modify the opinion, covering delays in GST, TDS, EPF and ESI remittances, unpaid MSME dues of ₹10.05 crore, and a long-term loan not serviced per schedule. The FY2023-24 report also flagged a material uncertainty on going concern and a Provident Fund recoupment order of ₹1.07 crore.
  2. Related-party contracts up to ₹310 crore sought with promoter-linked firms Major - The company sought shareholder approval for construction contracts worth up to ₹150 crore each with Silver Sands Beach Resort and Bharat Institute of Higher Education & Research, and ₹5 crore each with Mrs. Kalaiarasi and Accord Distilleries, for FY2026-27. Accord Distilleries, which holds 18.51% of the company, reported a loss of ₹48.28 crore on turnover of ₹116.18 crore in FY2024-25. In the July 2026 postal ballot, promoter votes totalling 4,630,952 shares were treated as invalid for three of the four resolutions.
  3. Contingent liabilities: a ₹14.99 crore GST dispute stack and a PF order Major - Disputed tax dues as at 31 March 2026 totalled ₹14.99 crore, per the auditor's Key Audit Matter. The Regional Provident Fund Commissioner directed on 29 January 2024 that the company recoup losses of ₹1.07 crore in its exempted PF trust; ₹81 lakh remained unpaid as at 31 March 2026. The company also issued a corporate guarantee of ₹1 crore to RAR Fincare Limited for a loan availed by Mrs. Kalaiarasi, a relative of the Chairman and Managing Director.
  4. A ₹28.36 crore capital restructuring flipped net worth from negative to positive Major - The NCLT Chennai Bench approved on 9 May 2023 a scheme extinguishing the company's entire preference share capital of ₹28.36 crore, with no consideration to preference shareholders. Net worth as at 31 March 2023 was negative ₹20.48 crore, which the company stated would improve to positive ₹7.87 crore post-extinguishment. The company also added a ₹3.16 crore revaluation gain to its Property, Plant and Equipment with an effective date of 28 February 2025.
  5. Preference shares extinguished, loan defaults, and a proposed ₹50 crore guarantee cap Major - The company carried ₹28.36 crore of cumulative preference shares as at 31 March 2023, but these were extinguished pursuant to an NCLT order dated 9 May 2023, with the outstanding balance reduced to zero as at 31 March 2024. Shareholders waived the 7% dividend for both FY2022-23 and FY2023-24. The company had defaulted in loan repayments as on 31 March 2024, and its Property, Plant and Equipment is pledged as security for a bank loan. The board sought approval on 25 February 2025 to provide guarantees or security up to a total limit of ₹50 crore over and above the statutory limit, stating guarantees are essential to secure additional contract work.
  6. Revenue recognition and receivables quality under persistent auditor scrutiny Major - The auditor flagged impairment assessment of trade receivables and revenue recognition under Ind AS 115 as Key Audit Matters in FY2023-24, citing the judgement involved and presumed fraud risk around revenue accuracy. Trade receivables may be past due over 365 days without impairment in FY2023-24, FY2022-23, and FY2024-25. Receivables days stood at 281 in FY2025, before falling to 31.68 in FY2026.
  7. New promoters acquired control via September 2023 share purchase agreement Major - A Share Purchase Agreement dated 29 September 2023 transferred 73.28% of paid-up capital from the Murugappa-family promoters to Mr. Sundeep Anand Jegath Rakshagan and associates, who became the new promoters. Three independent directors resigned during FY2023-24 "due to changes in the management". In the 25 July 2025 postal ballot, public non-institution shareholders cast just 0.43% of their shares, while promoter and promoter group cast 99.97%.
  8. Operating cash flow negative in three of the last four years; no dividend in FY2020-21 and FY2021-22 Major - Cash flow from operations was ₹-2.72 crore in FY26, ₹-1.63 crore in FY25, and ₹-7.14 crore in FY23, against profits of ₹0.17 crore, ₹0.41 crore, and a loss of ₹-4.51 crore respectively. Interest coverage stood at 1.1x in the latest year, with borrowings of ₹20.23 crore against cash of ₹0.19 crore. No dividend was recommended for FY2020-21 or FY2021-22.

What to watch

Bottom line: This is a record of a clean audit opinion that masks a recurring pattern of compliance and liquidity failures, a capital restructuring that repaired net worth without cash, and related-party contracts that dwarf the company's own turnover. The risk is concentrated in the company's ability to service its obligations and the governance around its promoter-linked transactions. Watch the settlement of the MSME and TDS dues, the PF recoupment, and whether the clean opinion holds in FY2026-27.