Rajesh Power Services' audited record is clean on its face: two consecutive unqualified audit opinions, unqualified internal-financial-control opinions, and explicit auditor clean-outs on fraud, wilful default, benami property, fund diversion and statutory dues. The record that deserves attention is the gap between reported profit and cash, the scale of off-balance-sheet obligations, and a related-party web that shareholders are being asked to enlarge.
Key findings
- Revenue grew 47% but receivables ballooned and operating cash stayed negative
Major- Revenue grew from ₹1,107 crore in FY25 to ₹1,628 crore in FY26, but operating cash flow was negative ₹41.42 crore in FY26 and negative ₹16.28 crore in FY25. Trade receivables rose from ₹73.71 crore on 1 April 2024 to ₹181.71 crore on 31 March 2025 and ₹348.77 crore on 31 March 2026. Management attributed the jump to "very high billing in the month of March," stating there are "no BESS receivables" and "no delay in any payment receivable from the client or customer," with payment terms of 45-60 days. - Related-party web is dominated by associate HKRP Innovations, with omnibus approval sought for up to ₹595 crore of annual flows
Major- Shareholders are being asked to approve related-party transactions for FY 2026-27 up to ₹786 crore, including sale of goods to HKRP Innovations Limited of ₹95 crore and purchase of goods from it of ₹500 crore. Management confirmed that associate HKRP is held 25% by Rajesh Power promoters and 50% by the "Harikrupa Group of families and their promoters". Management attributed the decline in share of profit from associate HKRP to "issues regarding site readiness by the customer," which shifted billing and commissioning timelines. - Supplier-finance terms double normal payment periods, while borrowing powers stand at ₹1,500 crore
Major- Supplier finance arrangements as at 31 March 2026 totalled 86.47 crore, with payment due dates of 60-120 days versus 0-60 days for comparable non-participating trade payables. Short-term borrowing increased from ₹29 crore to ₹82 crore between FY2025 and Q4 FY2026, while management stated "we don't see that stress on our books". The Board passed a resolution on September 3, 2026 regarding borrowing powers under Section 180(1)(c), noting the Board already has powers to borrow up to ₹1,500 crore. - Contingent liabilities more than doubled in FY26, driven by bank and corporate guarantees
Major- Total contingent liabilities stood at 411.95 crore as at 31 March 2026, up from 181.76 crore as at 31 March 2025. Bank guarantees outstanding rose to 312.72 crore from 126.39 crore, and corporate guarantees for sister-concern loans increased to 99.22 crore from 52.37 crore over the same period. Income tax demands under dispute fell to ₹1.21 lakh from 2.85 crore. - Promoter remuneration rose sharply while four executive directors resigned and promoter-group share transfers reshuffled 15% of voting rights
Major- Kurang R. Panchal's remuneration increased from 3.02 crore in FY2025 to 4.13 crore in FY2026, with similar rises for three other executive directors. Four executive directors resigned effective July 10, 2024, and received no director's remuneration in FY2025-26, though three received related-party salary in FY2026. On March 13, 2026, promoter Kurang Ramchandra Panchal acquired 27,09,503 equity shares (15.05%) via off-market Gift Deed, with no encumbrance reported. - The group structure is thin and recently assembled
Minor- HKRP Innovations Limited, an associate in which Rajesh Power Services holds 25.48% equity, converted from an LLP to a Public Limited Company effective July 20, 2024. Rajesh Power Projects Private Limited became a 100% wholly owned subsidiary effective February 28, 2026, with turnover of Nil. Consolidated financial statements were prepared for the first time for FY ended March 31, 2025, with no comparative information presented. - First-time Ind AS adoption restated FY2025 comparatives and booked a gratuity past-service cost
Minor- On Ind AS transition, employee benefit expense for FY2024-25 was reduced by ₹2.04 lakh and current tax of ₹0.52 lakh was regrouped from profit or loss to OCI. The Company recognised an exceptional item of ₹63.92 lakh for additional gratuity (past service cost) arising from the Labour Codes notified effective 21 November 2025. The auditor issued an unmodified opinion on the first Ind AS financial statements. - Two consecutive years of clean audit opinions with explicit CARO cleans
Clean- The standalone auditor's report for FY2025-26 issued an unqualified opinion with an Emphasis of Matter on first-year Ind AS adoption, with opinion not modified. The FY2024-25 standalone and consolidated auditor's reports each issued unqualified opinions with no Key Audit Matters and no Emphasis of Matter paragraphs. The FY2025-26 standalone auditor's report states no instance of fraud was noticed, no wilful default was declared, and no proceedings were initiated for benami property. - Auditor change was routine mandatory rotation, with fees falling after IPO work ended
Clean- The previous statutory auditor vacated office during FY2025-26 pursuant to mandatory rotation under Section 139(2), and this was not regarded as a resignation. Shareholders approved the appointment of M/s Dinesh R. Thakkar & Co. at the AGM held 5th September 2025, with 12,642,792 votes in favour (100.00%). Auditors' remuneration fell to ₹10.25 lakh in FY2025-26 from ₹20.32 lakh in the prior year, which had included ₹5.00 lakh for IPO-related services.
What to watch
- Omnibus RPT approval vote. Shareholder vote on the ₹786 crore omnibus related-party approval for FY 2026-27, including the ₹500 crore purchase from HKRP Innovations Limited.
- Receivables collection. Collection against the ₹348 crore outstanding as of Q4 FY26, with management expecting clearance in 45-60 days and debtor days to fall from 78 to around 60.
- Order book recognition. Recognition of the ₹3,326 crore transaction price allocated to unsatisfied performance obligations as at 31 March 2026, expected over the next 1-5 years.
- Borrowing drawdowns. Whether the ₹1,500 crore borrowing power approved on September 3, 2026 translates into actual drawdowns, given negative operating cash flow of ₹41.42 crore in FY2026.
- BESS equity commitment. Disclosure of the BESS project equity commitment, as management stated 70-80% bank financing with the remainder equity but could not provide the absolute equity number as of Q4 FY2026.
Bottom line: This is an audited record with clean opinions and explicit auditor confirmations on the usual fraud and diversion red flags. The risk sits in the gap between reported profit and cash, the scale of guarantees and supplier-finance obligations that sit off the balance sheet, and a related-party structure that is being asked to carry a larger share of sales and purchases. Read the receivables line and the guarantee note with that in mind, and watch whether the omnibus RPT approval passes and how the order book converts to cash.