Pajson Agro's record carries an unqualified audit opinion and a clean internal-controls sign-off, but the cash story is thin: four years of profit have produced almost no operating cash, and the growth that doubled revenue rests on receivables that grew six-fold. Two further items deserve attention: nearly all raw material flows through a Dubai group entity whose related-party disclosures are blank, and the company's reported borrowings understate its sanctioned bank facilities.
Key findings
- Nearly all raw material comes from a Dubai group entity with partial disclosures
Major- Management confirmed that "almost 96% of your raw materials are received from a group company based in Dubai" in the Q4 FY26 earnings call. The Audit Committee approved related-party purchases of ₹40 crore and advances of ₹25 crore with Pajson Global DMCC on 20 Jun 2026, up to 31 Mar 2027, representing 25.39% of annual consolidated turnover. The AOC-2 form in the FY2025-26 Annual Report shows the not-at-arm's-length section marked "N.A.," while the arm's-length section discloses related-party names, transaction nature, duration, values, and approval dates. - Profit is not converting to cash, and capex has an unexplained funding gap
Major- Cumulative CFO of ₹6 crore equals 0.13x of cumulative PAT less other income (₹49 crore − ₹1 crore) over FY23-FY26. FY26 CFO was −₹13.91 crore against PAT of ₹24.78 crore, a CFO/PAT ratio of −0.56x. IPO proceeds allocated ₹57 crore to the Vizianagaram facility, but management stated total capex for the plant is "about INR76 crores" excluding land, leaving a gap of \~₹19 crore whose funding source is not discussed. - Revenue nearly doubled on a six-fold jump in receivables
Major- Total revenue rose from ₹95.91 crore in FY24 to ₹255.72 crore in FY26, a 167% increase over two years. Receivables rose from ₹3.48 crore in FY23 to ₹18.24 crore in FY26, while receivables days rose from 3.48 to 26.04. Institutional revenue share rose from 1.39% in FY23 to 33.96% in FY26, and management attributes the receivables increase to institutional customers requiring "more credit". - Reported borrowings understate sanctioned bank facilities
Minor- Pajson Agro reported total borrowings of ₹34.24 crore as at 31 March 2026, of which ₹34.06 crore (99%) was short-term. Care Ratings assigned initial ratings on 1 April 2026 to long-term bank facilities of ₹20 crore and long-term/short-term facilities of ₹55 crore, a combined ₹75 crore. An overdraft facility secured by a fixed deposit of ₹12.50 crore was repaid and the bank's lien was discharged during the year. - Unqualified audit with two concrete exceptions and an audit-trail limitation
Minor- P. K. Maheshwari & Co. issued an unqualified opinion on the standalone financial statements for the year ended 31 March 2026. The auditor reported a discrepancy between stock in unaudited books and stock submitted to the bank for the quarter ended June 2025, due to under-reporting of book debts. Undisputed statutory dues in arrears include Provident Fund of ₹1.90 lakhs and ESIC of ₹0.012 lakhs, plus contractor-related PF of ₹20.76 lakhs and ESIC of ₹6.98 lakhs. - Statutory auditor resigned within a year; replacement proposed for five years
Minor- M/s P.K. Maheshwari & Co. was appointed for five years from 01.04.2025 and resigned effective 19.06.2026 because the engagement partner was surrendering his Certificate of Practice. M/s S.S. Kothari Mehta & Co. LLP was appointed on 16.07.2026 to fill the casual vacancy, and the Board proposes re-appointment from the 5th AGM to the 10th AGM. The resignation letter confirms no management-imposed limitation or circumstances preventing audit evidence.
What to watch
- Related-party purchases from Pajson Global DMCC. Approved up to 31 Mar 2027, to be reported in the FY2026-27 Annual Report.
- Capex funding gap. Deployment of the \~₹19 crore gap between stated ₹76 crore capex and ₹57 crore IPO allocation, with trial production targeted for Q3 FY27.
- Unutilised IPO proceeds. Utilisation of the ₹17.12 crore temporarily invested in bank deposits as at March 31, 2026.
- PP Softtech loan. Renewal or repayment at its revised maturity of 20 Mar 2027.
- Statutory dues in arrears. Resolution of PF and ESIC dues totalling ₹29.76 lakhs as reported in the FY2025-26 Annual Report.
Bottom line: This is a disclosed and audited record with a clean internal-controls opinion, but the economics are thin: profit has not become cash, and the growth that doubled revenue sits in receivables that grew six-fold. The risk is concentrated in two places: the Dubai sourcing arrangement with blank disclosures, and the unexplained funding gap in the capex programme. Watch whether the related-party purchases get reported with actual detail, and whether the Vizianagaram facility's funding gap gets a named source.