Kerala Ayurveda Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

Kerala Ayurveda's audit record has deteriorated sharply over the last two years, moving from clean opinions to qualified ones with repeated internal-control weaknesses. The company's financial reporting is also burdened by retrospective restatements, related-party transactions that repeatedly breached limits, and a cash flow that has not covered reported profits for five years. A SEBI settlement order in February 2026 and an admitted insolvency petition add to the picture of a company under sustained financial and regulatory strain.

Key findings

  1. Audit opinions turned qualified, with recurring control failures Major - The standalone audit opinion was unqualified for FY2023 and FY2024, but qualified for FY2025 over inventory valuation evidence and for FY2026. The FY2026 IFC opinion was separately qualified over material weaknesses in controls over statutory dues reconciliation and related-party transactions. CARO reported cash losses of ₹16.32 crore in FY2026 and ₹7.41 crore in the prior year.
  2. Promoter-group loans and transactions repeatedly breached limits Major - Current loans to promoter-group entities rose 23% to 37.01 crore in FY2025-26, with loans granted without repayment terms and fresh loans extended to settle overdue ones. Related-party transactions with Ayurvedagram Heritage Wellness Centre exceeded SEBI limits in FY2024-25, ratified at an EGM on 18.06.2025. The company then sought approval for up to ₹70 crore in transactions with Katra Holding and ₹35 crore with Katra Phytochem over five years.
  3. SEBI settlement for unapproved related-party transactions Major - SEBI issued a settlement order on February 03, 2026 for violation of Regulation 23(4), with the company paying INR 5,80,005.9. The violation stemmed from failure to obtain prior shareholder approval for material related-party transactions with Ayurvedagram Heritage Wellness Centre in FY2024-25. The Corporate Governance certificate dated 29.08.2025 lists 20 non-compliances, including board composition and disclosure lapses.
  4. Reported borrowings understate economic obligations Major - Lease liabilities grew sharply, with current lease liabilities jumping to 2.21 crore from ₹33.41 lakhs in FY2025-26. A land sale of ₹8.14 crore settled debt with no cash received. Working-capital statements filed with banks did not match the books in both FY2026 and FY2022-23. Shareholders approved raising the borrowing limit from ₹100 crore to ₹250 crore on 25th August 2025.
  5. Profits rest on retrospective corrections and prior-period gains Major - The company retrospectively corrected multiple prior-period errors in FY2024-25, including lease accounting "inadvertently overlooked" and borrowing costs "erroneously capitalised". Deferred tax assets rose 24.7% to 6.37 crore as at 31 March 2026. In FY2022-23, a ₹2.83 crore forex gain was recognised late due to "oversight".
  6. Promoter holding fell sharply while governance lapses continued Major - Katra Holdings' stake fell from 53.97% to 33.22% in June 2025. Shareholders rejected the continuation of promoter-linked director Mr. Anand Subramanian, with 99.4% votes against. The board lacked half independent directors from 19/03/2025 to 31/03/2025, and a director's resignation was intimated to the exchange four days late.
  7. Insolvency petition admitted, NCLT kept director appointments in abeyance Major - NCLT Kochi admitted Tata Global Beverages' Section 7 petition on 18.11.2021 for a disputed ₹5.18 crore claim, triggering the Corporate Insolvency Resolution Process. The High Court of Kerala stayed the order on 19.11.2021, and an NCLAT appeal was filed on 17.12.2021. A separate NCLT case by Katra Holdings (in liquidation) kept two director appointments in abeyance, pending as of 31.03.2025.
  8. Operating cash flow has not covered operating profit for five years Major - Cumulative operating cash flow of ₹4 crore covered only 0.20x of cumulative operating profit of ₹18 crore over ten years. Operating cash flow was negative in four of the last five years, including ₹(24.13) crore in FY26. Interest coverage was -1.9x and ROCE was -9.81% in FY26.

What to watch

Bottom line: This is a record of deteriorating audit quality, repeated governance failures, and cash losses that reported profits have not covered. The risk is concentrated in related-party dealings and a borrowing structure that understates true obligations. Watch whether the Scheme of Arrangement completes, and whether the next audit opinion and CARO responses show any improvement in controls and working-capital reporting.