RMC Switchgears Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

RMC Switchgears' record carries a clean set of audit opinions, but the cash story is weaker than the profit line: over six years, operating cash flow has converted only a sliver of reported profit into cash, while receivables have ballooned and the company has built a web of loans and guarantees to thinly capitalised promoter-controlled subsidiaries. The auditor has stayed unqualified, yet the accompanying internal-controls opinion has been described as "modified" for four straight years, and the FY2026 secretarial audit carried five compliance exceptions.

Key findings

  1. Revenue is growing fast but converting into cash poorly Major - Trade receivables rose from ₹148 crore to ₹205 crore during FY26, with receivable days at 186 versus 170 in FY25. Management states 90-95% of revenue is government-linked and "there is no due date concept in government", payment becomes due only when the utility accepts the bill. Revenue grew from ₹172.63 crore in FY24 to ₹318.16 crore in FY25, an 84.30% jump, and to ₹402 crore in FY26.
  2. A web of loans and guarantees to thinly capitalised solar subsidiaries Major - The unsecured loan receivable from subsidiary RMC Green Energy rose from 2.65 crore to 12.99 crore during FY2025-26. Shareholders on 14 December 2025 approved Section 185 limits up to ₹500 crore and Section 186 limits up to ₹800 crore for subsidiary transactions. RMC Solar One and RMC Solar Two each reported FY2024-25 revenue of Nil and net worth of ₹10.00 lakh, yet were each proposed for transactions up to ₹75 crore.
  3. Reported borrowings understate the economic obligations Major - RMC has already extended a ₹59 crore corporate guarantee for RMC Green Energy's credit facilities, with a further ₹49 crore proposed, taking total guarantees to that subsidiary to ₹108 crore. SIDBI loans of ₹1.4 crore, ₹10.7 crore and ₹18.78 crore are secured by liens on FDRs with SIDBI. Cash credit limits are secured by equitable mortgage of immovable properties including director-owned plots.
  4. Clean audit opinions, but repeated qualifications around them Major - The FY2025-26 standalone and consolidated opinions were unqualified, dated 29/05/2026. Yet the standalone report describes the internal-financial-controls opinion as "modified" while Annexure-B itself states controls were adequate, the same contradiction appeared in FY2021-22 through FY2023-24. The FY2025-26 secretarial audit carried a qualified opinion with five exceptions, including an unreported promoter contra trade.
  5. Subsidiary layer expanded while the only operating subsidiary was deconsolidated Major - RMC had no subsidiary in FY2021-22, incorporated Intelligent Hydel Solutions in January 2024 as its first, and added three more in FY2025-26. On 31 March 2026, RMC pledged its entire 51% stake in Intelligent Hydel to Saatvik Cleantech and concluded loss of control under Ind AS 110, so it was not consolidated. Form AOC-1 states no subsidiary was sold, while management said in the Q4 FY26 transcript the company "sold the IHSPL".
  6. Promoter family controls the company through interlocked roles Major - The three promoter directors, Ashok Kumar Agarwal, Ankit Agarwal and Neha Agarwal, signed the FY2025-26 financial statements, with Neha Agarwal the spouse of Ankit and daughter-in-law of Ashok. The secretarial audit recorded five compliance failures, including a promoter contra trade violating SEBI PIT Regulations that was not reported to the Stock Exchange. In FY2021-22, average managerial remuneration rose 400% while median employee remuneration fell 14.93%.
  7. Three statutory auditors in five years, two resigning mid-term Major - M/s L Kasat & Company resigned on 05.11.2020 citing Covid-19 office disruption, and M/s Manish Borad & Co. resigned on 15 May 2022 citing "reduced fees" not commensurate with audit effort. M/s Rakesh Ashok & Co. was appointed in June 2022 for a five-year term. Internal auditors changed four times between 2019 and 2021, and the secretarial auditor changed in 2020.

What to watch

Bottom line: This is an audited record with unqualified opinions, but the cash conversion is the weak joint, with cumulative operating cash flow of ₹10 crore representing only a 0.12x conversion of the ₹86 crore cumulative profit over six years, and receivables now sit at 186 days. The risk character is one of promoter-controlled expansion funded by related-party guarantees and short-term debt, with a subsidiary structure that changed shape on the last day of the year. Watch the shareholder vote on the ₹500 crore limits, and whether the retention money and FY2027 cash flow actually arrive as management expects.