Shivam Chemicals' audit record is clean on its face, unqualified opinions in all three years, but the cash story and the compliance trail deserve a closer read. Reported profit has not been converted into operating cash over four years, and the auditor spent two of the last three years flagging gaps in the books-and-records infrastructure before reporting full compliance in FY26.
Key findings
- Reported profit is not backed by operating cash flow
Major- Cumulative operating cash flow was ₹-7 crore over FY2023-FY2026 against ₹13 crore of cumulative PAT, a CFO/(PAT−other income) of -0.75x. In FY2025-26, CFO was ₹-5.99 crore against PAT of ₹6.19 crore. The company began capitalising project expenditure into Capital Work-in-Progress for the first time in FY2025-26, disclosing the DCP Plant and related project costs; no such capitalisation existed in FY2024-25 or FY2023-24. - Clean opinions, but a three-year trail of books-and-records exceptions
Major- PSRD & Co. issued unqualified opinions for FY2024, FY2025, and FY2026 with no Key Audit Matters in any year. For FY2024, the auditor flagged that the audit trail feature was not enabled or was unverifiable, and that daily backups were not kept on servers in India. For FY2025, the audit trail was again not enabled throughout the year, and undisputed statutory dues were outstanding over six months. For FY2026, the auditor reported the audit trail operated throughout the year with no tampering and no overdue statutory dues. - Auditor resigned in FY24; replacement approved unanimously
Minor- M/s. Bharat Kanakia & Associates resigned during FY2023-24, and the Board appointed PSRD & Co. for five years from FY2024-25 to FY2028-29. The outgoing auditors raised "no considerable issues, objections or concerns" about their resignation. Shareholders approved the appointment with 100% of votes cast in favour. Consolidated audit fees rose from ₹0.60 lakh in FY23 to ₹9.52 lakh in FY24. - SEBI penalty and BSE queries on half-year results
Minor- SEBI imposed a penalty of ₹83,780 for a 71-day delay in appointing a qualified Company Secretary as Compliance Officer, rectified on 30 January 2026. BSE raised discrepancies on the half-year results ended 30 September 2024 via emails dated 4 and 12 December 2024; the company issued revised results on 8 and 19 December 2024. The Board's Report states no other significant or material regulatory orders were passed during FY2025-26. - Core production sits in a wholly-owned subsidiary
Minor- Shivam Chemicals and Minerals Private Limited, 100% held since FY2023, carries out manufacturing of hydrated lime at Dahej, Gujarat. The parent holds a ₹7.12 crore strategic investment in the subsidiary and provided a corporate guarantee of ₹4.33 crore outstanding for its bank facilities as at 31 March 2026. - Promoter family controls the board and its remuneration
Minor- Promoter and Promoter Group shareholding stood at 73.00% as of FY2025-26, with zero pledge. All resolutions at the September 2024 and September 2025 AGMs received 100% of votes cast in favour, with no dissent recorded. Board decisions during FY2024-25 were unanimous. Mr. Shivam Sanjiv Vasant, son of the Managing Director, held 5.47% of paid-up capital and drew remuneration of ₹21,00,000 in FY2025-26. - Only contingent exposure is a disclosed subsidiary guarantee
Clean- The company's sole contingent liability is a corporate guarantee for its wholly-owned subsidiary's IndusInd Bank facilities, outstanding at ₹4.33 crore as at 31 March 2026, with management expecting no liability to arise. No pending litigations were reported in FY2024 or FY2025. Capital commitments were ₹Nil across all three years.
What to watch
- DCP Plant capitalisation. The completion schedule and capitalisation of the DCP Plant CWIP are disclosed in the FY2025-26 consolidated financial statements.
Bottom line: This is a disclosed and audited record with a clean litigation and commitment profile. The risk sits in the gap between reported profit and operating cash, and in the auditor's inability to verify the audit trail and backups in FY2024 and FY2025. Watch whether the DCP Plant capitalisation turns into cash-generating operations, and whether the ₹7.12 crore strategic investment in the subsidiary and the ₹4.33 crore corporate guarantee ever get a repayment schedule.