Khandelwal Extractions Limited (KEL) is an Indian public limited company listed on the **BSE Limited**. Historically a manufacturing entity, the company underwent a fundamental structural shift following the permanent closure of its solvent oil plant and manufacturing operations in **November 2018**. Today, KEL operates as a specialized real estate holding and leasing firm, focusing on the monetization of its industrial land and infrastructure assets. --- ### **Strategic Pivot: From Manufacturing to Asset Monetization** Since the cessation of its core manufacturing activities, KEL has transitioned into a lean, asset-light business model. The company’s primary objective is the optimal utilization of its infrastructure located at **Akrampur-Magarwara, Distt. Unnao (Uttar Pradesh)**. * **Core Revenue Model:** The company generates revenue exclusively through the leasing of factory buildings and industrial godowns. * **Asset Disposal:** To streamline the balance sheet and exit the industrial sector, all plant and machinery have been sold. * **Key Tenancy:** A significant portion of the revenue is anchored by **Godrej Agrovet Limited**, which leases **Godown Nos. 1, 3, 5, 6, 7 & 8**. * **Lease Terms:** The primary lease agreement was recently renewed for an **11-month** term effective **June 1, 2025**, covering an area of approximately **49,511 sq. ft.** * **Growth Opportunity:** **Godown Nos. 2 & 4** are currently vacant. Management is actively seeking new tenants to maximize capacity utilization and increase rental yields. --- ### **Financial Profile & Capital Structure** KEL maintains a conservative financial stance, characterized by a **debt-free** balance sheet and a transition to a **zero-borrowing** model as of **August 2025**. | Metric | Details | | :--- | :--- | | **Authorized Capital** | **Rs. 2 Crore** | | **Paid-up Equity Capital** | **Rs. 85,01,000** (8,50,100 shares of Rs. 10 each) | | **Accounting Standards** | **Ind-AS** (Compliant since April 1, 2017) | | **Tax Strategy** | Opted for reduced corporate tax under **Section 115BAA** | | **Dividend Policy** | **No dividend** recommended for **FY24-25** to preserve liquidity | **Comparative Financial Position (INR in Lacs):** | Metric | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :---: | :---: | :---: | | **Total Equity** | **291.74** | **262.14** | **228.10** | | **Total Borrowings** | **Nil** | **48.00** | **88.00** | | **Current Assets** | **233.49** | **304.19** | **304.44** | | **Current Liabilities** | **60.08** | **118.96** | **65.01** | | **Financial Assets*** | **174.30** | **235.75** | **247.74** | *\*Includes Trade Receivables, Cash & Cash Equivalents, and Loans.* --- ### **Governance Stability & Leadership Continuity** The company’s strategy emphasizes institutional stability and the retention of historical financial expertise to navigate its post-manufacturing phase. * **Executive Continuity:** **Mr. Dinesh Khandelwal** has been re-appointed as **Whole-Time Director (Finance) & CFO**. His tenure has been extended for **three years** effective **April 1, 2026**, ensuring consistent oversight of the company’s financial health. * **Audit Framework:** Internal controls are managed by **G. Chandra Agarwal & Co.** (**Internal Auditors** for **FY 2024-25**). * **Long-term Compliance:** **M/s Banthia & Co.** has been appointed as **Secretarial Auditors** for a **five-year term** (**2025–2030**) to ensure strict adherence to **SEBI (LODR) Regulations**. * **Reporting Integrity:** The **Un-audited financial results** for the quarter ended **June 30, 2025**, received a **Limited Review Report** with **no adverse remarks**, signaling transparent accounting practices. --- ### **Risk Mitigation & Contingency Management** Management characterizes the current business risk as **limited** due to the nature of corporate leasing, yet several legacy and operational risks remain. **1. Liquidity and Market Risk** * **Liquidity:** Risk is considered **non-existent** in the short term as current assets significantly exceed current liabilities. * **Credit Risk:** Rated as **low**; the company relies on the creditworthiness of established corporate tenants and has a strong track record of receivable collections. * **Market/Currency Exposure:** The company has **zero exposure** to foreign currency and is **not an active investor** in equity markets, protecting it from external volatility. **2. Legal and Tax Contingencies** The company is currently contesting several tax-related liabilities: | Nature of Liability | Amount (**Rs. in Lacs**) | Status | | :--- | :---: | :--- | | **VAT Disputed Liability** (AY 2011-12) | **16.71** | Appeal pending with **Addl. Commissioner Kanpur**. | | **VAT Tax Liability** (FY 16-17 & 17-18) | **24.24** | Adjusted against refunds; Appeal filed by company. | | **Unacknowledged Claims** | **5.21** | Claims not recognized as debts. | *Note: The company anticipates potential refunds following favorable Supreme Court rulings in similar GST-related matters.* --- ### **Critical Investment Considerations** Investors should note the following factors regarding the company’s long-term outlook: * **Going Concern Status:** Auditors have highlighted a material risk regarding the company’s ability to continue as a **Going Concern** given the cessation of its primary manufacturing business. Future viability depends entirely on the sustainability of rental income. * **Regulatory History:** While previously flagged as **SDD Non-Compliant** by the **BSE**, the company successfully cleared a virtual inspection in **May 2024** and is currently rectifying compliance regarding the transfer of undelivered shares under **Clause 39 of LODR**. * **Concentration Risk:** Revenue is highly concentrated in a single site and a limited number of tenants. The ability to lease the currently vacant **Godown Nos. 2 & 4** remains a key performance indicator for future growth.