Simplex Castings' record carries a clean audit opinion for the last five years, but that clean surface sits over a cluster of unresolved disputes and stretched finances. The most consequential items: ₹95 crore of tax demands under appeal with no provision booked, a credit rating downgrade for a missed EMI, and a pattern of accounting choices that have shifted losses across periods.
Key findings
- ₹95 crore of tax demands under appeal, with no provision booked
Major- GST demands of ₹69.75 crore and an income tax demand of ₹25.27 crore for AY 2018-19 were under appeal as of FY2025-26, with the auditor flagging both in Emphasis of Matter paragraphs. Five GST penalty orders totalling ₹55.98 crore were also under appeal, and the company made no provision based on legal opinion that outcomes are likely favourable. Counter-guarantees to banks rose from ₹5.07 crore in FY2021-22 to ₹20.11 crore in FY2025-26. - A CARE downgrade for a missed EMI, and working capital limits nearly maxed out
Major- CARE Ratings downgraded Simplex Castings' long-term bank facilities from CARE B to CARE C on 29 August 2025, citing a delay in servicing a debt obligation. A ₹4.5 crore loan EMI due 5 June 2025 was not debited due to insufficient funds, and was paid the next day; the company called it a "technical glitch". Fund-based working capital limits averaged 92.21% utilisation for the 12 months ending June 2025. - Clean opinions since FY2022, but a qualified FY2021 audit and earlier disclosed defaults
Major- The FY2020-21 audit was qualified on segment reporting and a ₹2.60 crore scrap reclassification the auditor said pertained to prior years. CARO reports for FY2019-20 and FY2020-21 disclosed bank defaults of ₹4.71 crore and ₹7.00 crore respectively. Opinions were unqualified for each year from FY2021-22 through FY2025-26. - Accounting choices have shifted losses and income across periods
Major- The FY2020-21 scrap reclassification was the subject of a qualified opinion, and the auditor's review for the December 2020 quarter said the same ₹2.60 crore should have been corrected under Ind AS 8. In FY2022-23, the company booked a ₹13.96 crore exceptional expense for Ukraine-related losses and a ₹14.2 crore exceptional loss on written-down spares. In FY2019-20, a depreciation method error was corrected with no restatement as the impact was deemed not material. - Revenue recognition leans on year-end judgement, and receivables outpace sales
Major- The company derecognised ₹10.97 crore of revenue in FY2024-25 because transfer-of-control criteria were not met at year-end, an area the auditor flagged for significant management judgement. Trade receivables stood at ₹51.14 crore, 28.16% of total assets, and the receivable turnover ratio "significantly decreased". Management's claims of new order flow from the power sector and railway business are projections without confirmed orders. - Three auditor changes in six years, the latest right after signing the FY2026 accounts
Major- M/s O P Singhania & Co resigned in July 2020, and M/s APAS & Co was appointed to fill the vacancy. M/s Harsh Jain & Associates was appointed in September 2024 for five years, then resigned on 6 August 2026, days after signing the FY2025-26 financials on 28 May 2026. M/s MDN & Associates was appointed to fill the casual vacancy on 14 August 2026. - Promoter reappointments and share allotments pass with minimal public support
Major- At the EGM held 21 June 2025, resolutions for a preferential issue and the re-appointment of Mr Ketan Moolchand Shah as Chairman and CEO each received only 2,449 votes in favour from public non-institutions, with promoters casting no votes on their 3,769,212 shares. At the AGM held 30 September 2024, 3,130,712 votes were recorded as invalid on the resolution to reappoint Mrs Sangeeta Ketan Shah as Managing Director. Promoter holding fell from 56.54% before the March 2024 preferential issue to 46.98% after the March 2026 issue. - Rapid turnover in CFOs, company secretaries and directors
Major- Two company secretaries resigned within a year: Mrs Akanksha Kotwani on 21 August 2025 and her successor Mrs Sakshi Jain on 1 June 2026. In FY2020-21, Mr Deb Mukherjee was appointed CFO on 30 July 2020 and Mr Avinash Hariharno replaced him on 13 February 2021. In May 2026, Mr Hariharno ceased as CFO upon becoming Whole-Time Director, and Mr Rajesh Kumar Acharya took over as CFO. An independent director, Mr Champak Dedhia, also provides professional services to the company through his firms.
What to watch
- GST appeal outcomes. Demands of ₹69.75 crore were under appeal as of the FY2025-26 audit report dated 28 May 2026.
- Income tax appeal outcome. The ₹25.27 crore demand for AY 2018-19 was under appeal as of the same report.
- Preferential allotment funds. ₹21 crore from the March 2026 allotment remained unused as at 31 March 2026.
- FY2026-27 guidance. Management guided to ₹300 crore revenue against ₹60 crore in Q1 FY27, dependent on orders that have not yet been placed.
Bottom line: This is a company with a clean recent audit record but a heavy load of unresolved litigation and a history of using accounting discretion to manage reported profit. The risk is concentrated in two places: the tax demands, which at ₹95 crore dwarf the ₹9 crore profit before tax, and the financing structure, where working capital is fully collateralised and a single missed EMI triggered a downgrade. Watch the appeal outcomes and whether the order book converts into the guided revenue.