SMT Engineering Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

SMT Engineering Ltd's record shows a company that has been through a fundamental transformation in the last two years: a dormant shell with no subsidiaries became a two-tier manufacturing group through a share-swap acquisition, control changed hands with an entirely new board, and the company took on its first secured bank debt. The clean audit opinions across all seven years sit against a backdrop of persistently negative operating cash flow, a sharp escalation in related-party dealings, and a series of small but telling regulatory fines.

Key findings

  1. Operating cash flow has been negative for nine straight years against reported profits Major - Cumulative operating cash flow was ₹-88 crore versus cumulative PAT of ₹23 crore over the nine years to FY2026, a CFO/(PAT−other income) ratio of -4.42x. In FY2026 alone, the company reported PAT of ₹23.08 crore but CFO of ₹-48.25 crore, a CFO/PAT ratio of -2.09x. No dividend was declared or paid during FY2022-23, and the Board did not recommend one for FY2019-20.
  2. Related-party dealings escalated sharply after the FY2025 acquisition, with admitted compliance failures Major - The secretarial auditor reported that SMT Engineering did not obtain prior shareholder approval for material related party transactions as required under Regulation 23(4) of SEBI LODR in FY2025-26. The company sought omnibus approval in the 5 Sep 2026 AGM notice for related party transactions with a material subsidiary valued at ₹25 crore, representing 15.41% of the listed entity's annual consolidated turnover. The independent auditor reported that loans were granted to related parties without security, repayable on demand, without specifying terms and period of repayment.
  3. Debt position shifted from zero borrowings to ₹78.96 crore of secured bank debt in FY2026 Major - As at 31st March 2026, the company had financial liabilities of ₹78.96 crore subject to variable interest rates, where a 100 basis point increase would reduce profit before tax by ₹4.46 crore. Cash credit facilities from Punjab National Bank are secured by hypothecation of the entire stock, book debts and receivables, plus personal guarantees of six promoter-family members. In FY2024-25, the company stated it "currently does not have any borrowings".
  4. A dormant shell transformed into a two-tier manufacturing group via a ₹27.45 crore share-swap acquisition Major - The company had no subsidiaries from FY2020-21 through FY2023-24. On March 26, 2025, it acquired 100% of Sai Machine Tools Private Limited for ₹27.45 crore through a Share Swap Arrangement dated March 25, 2025, issuing 94,64,134 equity shares at ₹29 per share. Consolidated PAT of ₹24.54 crore versus standalone PAT of ₹0.85 crore in the latest year means 97% of profit resides at subsidiaries.
  5. Control changed hands in March 2025 with the entire board replaced by the Jaiswal family Major - The entire board of SMT Engineering Ltd was replaced on March 7, 2025, with six new directors appointed including Ajay Jaiswal as MD & CFO and Vishal Jaiswal as Wholetime Director. On 20 March 2025, acquirers Ajay Jaiswal, Vishal Jaiswal, and Poonam Jaiswal acquired 26,90,000 shares (73.20%) of Adarsh Mercantile Ltd under SEBI (SAST) Regulations. Promoter holding in SMT Engineering Ltd declined by 6.33 percentage points in one year to 67.44%, with promoter pledge at 0.00% [SQL].
  6. Contingent-liability exposure is concentrated in a June 2026 corporate guarantee for the subsidiary Minor - On 12 June 2026, the company issued a corporate guarantee in favour of Punjab National Bank to enhance the Cash Credit limit of Sai Machine Tools Pvt Ltd from ₹31.25 crore to ₹45 crore. The company stated the guarantee had no impact other than disclosure as a contingent liability. Its own litigation record has been clean since FY2020, when disputed income-tax dues were disclosed.
  7. BSE fines for late filings began in FY2025-26 after years of clean disclosures Minor - BSE levied fines of ₹88,500 and ₹5,900 (both including GST) for delays in filing annual financial results and related party transactions, plus fines of ₹75,000 and ₹96,000 (both exclusive of GST) for other filing delays. The company paid ₹87,320 on July 10, 2026 and ₹25,960 on July 18, 2026 for the secretarial compliance report delay, citing "procedural delay in making payment". The FY2024-25 Corporate Governance report stated no penalties were imposed in the last three years.
  8. Seven consecutive years of clean audit opinions, with a FY2026 consolidated CARO disclosure gap Minor - The standalone and consolidated audit opinions were unmodified in each of FY2020 through FY2026, with no Key Audit Matters communicated in any year. The FY2026 consolidated audit report states that auditors of holding and subsidiary companies made "qualifications or adverse remarks" in their respective CARO reports, but the actual qualifications are not disclosed. The audit trail feature operated throughout the year with no instance of tampering found in FY2024, FY2025, and FY2026.
  9. Statutory auditor rotated on schedule after a five-year term Clean - M/s NKSJ & Associates was appointed at the AGM held September 08, 2020, by unanimous vote of 24 members representing 2,811,004 votes (100% in favour). M/s Anil Kamal Garg & Company was appointed for 5 years from the conclusion of the FY2024-25 AGM, with shareholders passing the resolution on October 01, 2025. The CARO reports for FY2021-22 and FY2022-23 state no resignation of statutory auditors occurred during those years.

What to watch

Bottom line: This is a record of clean audit opinions and an orderly auditor rotation, but the underlying picture is of a company that changed identity in a single year: new owners, new board, first borrowings, first subsidiaries, and 97% of profit now sitting below the parent. The central question is whether the group's reported earnings will ever convert into cash at the holding company, and whether the related-party machinery that built the group is governed properly. Watch the AGM vote on the ₹25 crore related party approvals, and whether the next annual report discloses what the component auditors actually qualified.