Simplex Mills Company's record is thin: six years of unqualified audit opinions sit alongside persistent cash losses, negative net worth, and a going-concern warning that has shadowed the audit report for half a decade. Two things deserve attention: operating cash flow has been negative every year since at least FY2020-21, and the company itself states that the debt-equity ratio remains negative on account of negative net worth.
Key findings
- Operating cash flows are persistently negative and net worth is eroded
Major- Operating cash flow was negative in every year from FY2020-21 through FY2025-26, including negative ₹0.39 crore against a net loss of ₹0.17 crore in the latest year. ROCE was -12.03% in FY2025-26 and has been negative for four straight years, while the company itself states that the debt-equity ratio remains negative on account of negative net worth. The Board recommended no dividend for FY2022-23, and none has been paid since at least that year. - Reported results are shaped by exceptional items and deferred tax choices
Minor- In FY2022, the company reported a net profit of ₹7,004.83 thousands solely because of net exceptional items of ₹7,352.60 thousands, while total income was ₹6,195.45 thousands. Deferred tax assets have not been recognised in FY2021-22, FY2022-23, FY2024-25, and FY2025-26, with each year noting a reduction due to lapse of brought-forward business losses. The NCLT approved consolidation of 100 equity shares of ₹10 each into 1 share of ₹1,000 each on 3 March 2023, with the fractional amount transferred to Capital Reserve. - Auditor rotation was a routine expiry of term with no resignations
Clean- M/s. K. M. Shah & Co. served as statutory auditor from FY2017-18 to FY2021-22, with their term expiring at the 24th AGM on 2 August 2022. Khandelwal and Mehta LLP was appointed for a first term of five years at that same meeting, and the FY2023-24 audit report explicitly states there was no resignation of statutory auditors during the year.
What to watch
- Disputed excise duty. ₹10,246.25 thousand remains pending before authorities, a dispute on record since at least FY2020-21.
- Recoverability of loans. The FY2025-26 audit report flags loans and advances to a company whose net worth is eroded; management asserts recoverability based on projections.
- Akola land sale. Land and buildings were classified as 'Assets Held for Sale' in FY2025-26, with any gain or loss to be recognised upon disposal.
- Director age limit. Shri Shrikrushna N. Pawar will attain age 75 during his term ending 15 June 2031, requiring member approval under SEBI LODR.
Bottom line: This is a disclosed record where the auditor has been consistently present and unqualified, but the underlying economics have not worked for years. The risk sits in the persistent cash losses that the going-concern warning flagged for five years. Watch whether the disputed excise duty resolves and whether the loans to the net-worth-eroded entity are recovered.