Kinetic Engineering Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

Kinetic Engineering's record shows a company whose reported profits have repeatedly not been matched by cash, and whose capital-raising and related-party activity has flowed through a board and shareholder base dominated by the Firodia family. The sole subsidiary has absorbed significant equity funding without starting production, and a long-standing preference-share obligation went unprovided for years after shareholders gave in-principal consent to waive the cumulative dividend. The audit record is clean, but the underlying pattern deserves attention.

Key findings

  1. Promoter entities are raising ₹177 crore via warrants with no independent check Major - Promoter and promoter group votes on the 21 February 2025 postal ballot to issue 1,03,56,725 convertible warrants were 13,119,106 in favour and 0 against, 100% of votes polled. The 21 January 2025 notice proposed issuing the warrants at ₹171 each, aggregating ₹177.10 crore, with promoter entities subscribing to 93,56,725 of them. As at 31 March 2026, 50,87,134 warrants remained outstanding. The board is dominated by the Firodia family across three generations, with the MD being the son of the Chairman and the brother of a Non-Executive Director.
  2. Promoter loans are repeatedly converted into equity, and related-party approvals exceed the company's own turnover Major - Kinetic Engineering allotted shares to promoters on conversion of an unsecured loan in August 2022, and to a promoter entity in November 2022. The FY2025-26 AGM notice sought approval for material related-party transactions with Kinetic Watts and Volts Ltd. that "may exceed Rs. 1,000 crores or 10% of annual consolidated turnover". A resolution to sell non-core assets to Micro Age Instrument Private Ltd., a related party, for ₹26 crore passed on 2 July 2024 with 99.93% of valid votes in favour, while 13,152,069 promoter votes were declared invalid.
  3. The only subsidiary has absorbed ₹37.8 crore of equity funding and remains loss-making with no production Major - Kinetic Engineering had one subsidiary, Kinetic Watts and Volts Limited, as of 31 March 2025. The subsidiary issued shares through rights issues in FY2023-24 and in four tranches between 10 October 2024 and 4 January 2025, increasing paid-up capital to ₹37,83,60,000. Production had not yet started as of FY2024-25. For the period April 2025 to March 2026, it reported paid-up capital of 84.84 crore, negative reserves of ₹(222.67) lakhs, and a loss of ₹(143.63) lakhs.
  4. Reported borrowings understate economic obligations: preference dividends went unprovided for years, and a 2018 conversion still awaits approval Major - Preference shareholders gave "in-principal consent" for a dividend waiver and conversion into equity, and the company made no provision for the cumulative 8.5% dividend, treating the shares as other equity from FY2019-20 through FY2023-24. The company stated it was "in the process of obtaining necessary approval from BSE/SEBI" for a 5 February 2018 OCCPS conversion in annual reports from FY2019-20 through FY2023-24. The board redeemed all outstanding preference shares on 27 March 2025 using warrant proceeds of ₹19,63,52,260. Interest coverage was -1.2x in the latest year.
  5. Operating cash flow has been negative for two years against reported profits, and returns have collapsed Major - In FY2024-25, the company reported PAT of ₹6.23 crore but CFO of ₹-21.56 crore, a CFO/PAT ratio of -3.46x. In FY2025-26, it reported PAT of ₹0.87 crore but CFO of ₹-18.98 crore, a CFO/PAT ratio of -21.82x. ROCE declined from 14.61% in FY2023-24 to 8.78% in FY2024-25 to 3.05% in FY2025-26. The company's return on investment went down in FY2024-25 due to increased investment in the subsidiary.
  6. Accounting-policy choices have flattered reported losses and asset values while cash stays negative Major - Kinetic Engineering carried exchange differences on long-term non-monetary items in Fixed Assets at ₹1.25 crore as of March 2026, down from ₹11.25 crore in FY2020. The gross block includes a court-approved revaluation of Freehold Land at 21.69 crore and Building at 31.89 crore. The company recognised deferred tax assets for carried-forward losses, with recognition dependent on future taxable profit. The average effective tax rate was 0.0% versus a statutory 25.2% over the latest three years.
  7. Revenue growth is not matched by cash, and receivables lack related-party disclosure Minor - Standalone revenue grew from ₹135 crore in FY2023 to ₹158 crore in FY2026, while operating cash flow fell from ₹14.55 crore to ₹-18.98 crore over the same period. Trade receivables as of 31 March 2023 were 29.33 crore, all unsecured and considered good, with no receivables from directors or officers. The Trade Receivables Turnover Ratio improved to 4.52 times in FY2023 from 4.21 times in FY2022.
  8. A ₹2.07 crore dishonoured bills-of-exchange claim has been unresolved for seven years Minor - Kinetic Engineering purchased six bills of exchange for ₹2.07 crore that matured but were not honoured, and filed suits in the High Court of Judicature at Bombay. The same claim was disclosed in the standalone financial statements from FY2019-20 through FY2025-26, with no resolution, provision, or recovery disclosed.

What to watch

Bottom line: This is a disclosed and audited record, but the pattern is consistent: reported profits are not converting into cash, and capital raised through promoter-linked warrants has flowed into a subsidiary that has yet to produce anything. The risk is concentrated in related-party transactions and the absence of an independent check on them. Watch the AGM approvals and the subsidiary's first operating results.