Aartech Solonics Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

Aartech Solonics' audit record is clean on its face, unqualified opinions every year since FY2020, with no Key Audit Matters ever reported. But the cash story is weaker than the profit story, and the promoter family sits at the centre of both the executive suite and a series of related-party transactions that have repeatedly needed special shareholder approval.

Key findings

  1. Operating cash flow has persistently failed to back reported profit Major - Over FY2022-FY2026, cumulative operating cash flow was ₹-6 crore against cumulative operating profit of ₹10 crore, a CFO/EBITDA ratio of -0.59x. In FY2026, the company reported PAT of ₹3.97 crore but CFO of ₹-0.75 crore, a CFO/PAT ratio of -0.19x. FY2023 was the widest gap: PAT of ₹1.42 crore against CFO of ₹-4.82 crore, a CFO/PAT ratio of -3.39x.
  2. Recurring unsecured loans to subsidiaries, with a history of overdue related-party loans Major - In FY2025-26, Aartech granted unsecured loans of ₹2.34 crore to wholly-owned subsidiaries at 8% and 8.5% interest. In FY2023-24, it granted ₹4.97 crore at 8% interest, approved by the Audit Committee and Board on 06 September 2023. The FY2019-20 auditor reported that loans to parties covered under Section 189 of the Companies Act had principal and interest overdue for more than 90 days. On 26 July 2024, shareholders authorised loans and guarantees to subsidiaries up to ₹10 crore under Section 185, and approved material related-party transactions of ₹10.00 crore for FY2024-25.
  3. Promoter family holds both executive roles and has repeatedly sought approval for pay above statutory limits Major - Mr. Amit Anil Raje (Chairman & Managing Director) and Mrs. Arati Nath (CEO & Director) are siblings and children of promoter Mr. Anil Anant Raje, all three on the Board as of March 31, 2026. Their remuneration ceilings rise to ₹50,00,000 each effective 1st April 2026, with Special Resolutions sought because the pay may exceed Section 197 limits. In FY2021-22, special resolutions were also needed because remuneration exceeded 5% of estimated net profits under Section 198.
  4. Consolidated profit sits almost entirely in subsidiaries; one associate has gone dark Minor - Consolidated PAT was ₹4.89 crore versus standalone PAT of ₹0.76 crore in the latest year. However, the FY2025-26 Annual Report p.312 shows both subsidiaries were loss-making (combined -₹161.58 lakh), while the parent's share was 140.59% of consolidated profit. The company could not obtain financial statements from Enerqual Technologies Pvt. Ltd due to an ongoing dispute, and the impact was excluded from consolidation. Epsilon Ten Ltd's dormant status is from the FY2023-24 Annual Report, not the latest year. The FY2025-26 standalone auditor's report contains an Emphasis of Matter noting the Enerqual investment is valued at cost with no impairment testing; the opinion was not modified.
  5. Full impairment of the UK associate investment, with profit still growing Minor - Aartech recognised a one-time impairment of ₹3.93 crore on its investment in Epsilon Ten Limited, UK, and PAT still grew 41% even after this write-down. The consolidated statements as at 31.03.2025 carried the investment at ₹3.93 crore; Epsilon Ten had accumulated losses and low net worth, and management's impairment test concluded the recoverable amount was lower than the carrying amount.
  6. Seven years of clean opinions, but repeated auditor flags on associates and loan repayments Minor - The standalone audit opinion was unqualified every year from FY2019-20 through FY2025-26, with no Key Audit Matters in any year. The consolidated opinion was unqualified from FY2022-23 through FY2025-26. CARO reports for FY2020-21 through FY2022-23 each stated that loans to parties under Section 189 had stipulated repayment schedules but repayments were "not regular," with principal and interest overdue for more than ninety days.
  7. Four statutory audit firms since FY2020, an internal auditor resignation, and flat fees Minor - The statutory auditor changed from SPARK & Associates to Ramanand Aiyar & Co. at the FY2019-20 AGM, then to M/s BANCRS & Co. LLP at the 41st AGM held 30th September 2023. Audit fees stayed flat at ₹2.50 lakhs across FY2023-24, FY2024-25, and FY2025-26. Internal Auditor M/s Prem Chand Jain & Co. resigned effective 28th December 2023, citing "professional pre-occupations".
  8. Modest reported borrowings, but property and flats pledged as collateral Minor - The HDFC Bank cash credit account carries interest at 8.5% floating, secured by hypothecation of stocks and debtors. The company pledged industrial property of approximately 14,779 sq. ft at Mandideep as collateral for ₹5,12,00,000, and 8 flats at Indus Mandideep as collateral for ₹67,25,000, in FY2025-26. Management stated in the Q1 FY27 transcript that the balance sheet is "very healthy with negligible debt on our books" and that they have "only non-fund-based liabilities".

What to watch

Bottom line: This is a disclosed and audited record with unqualified opinions every year, but the cash conversion is weak, cumulative operating cash flow has been negative over five years despite positive profits. The risk sits in related-party money flows: loans to subsidiaries, promoter pay above statutory limits, and an associate that has gone dark. Watch whether the Enerqual dispute resolves, whether the increased pay ceilings pass, and whether subsidiary loans come back.