Fusion Finance’s record pivots on a single year: a ₹1,864.91 crore credit-loss charge in FY25 that the auditor could not confirm belonged only to that year, followed by a return to profit in FY26 that leans on a ₹76.78 crore deferred tax asset. The audit opinion went to qualified with a going-concern warning and then back to unqualified after a rights issue and auditor change. Borrowings of ₹5,570.76 crore understate the economic obligation because securitised loans stay on the books, covenants are breached, and partly paid shares carry an uncalled liability. The founder-MD’s pay exceeded statutory limits two years running, the board saw sweeping exits, and the promoter family now seeks reclassification as public shareholders.
Key findings
- FY26 profit includes a deferred tax credit of ₹76.78 crore
Major- The company recorded an allowance for Expected Credit Loss of ₹1,864.91 crore in FY25 and stated it was impracticable to assess how much belonged to prior periods. The net deferred tax asset of ₹91.67 crore at March 2024 was fully reversed during FY25 on going-concern uncertainties. FY26 profit of ₹13.85 crore includes a deferred tax credit of ₹76.78 crore. - Reported borrowings of ₹5,570.76 crore understate economic obligations
Major- As at March 31, 2025, the company breached covenants on ₹4,762.62 crore of borrowings, making them technically repayable on demand; extensions covered ₹4,079.92 crore but ₹682.70 crore had none as of that date. Securitised loans fail derecognition under Ind AS 109 because the company retains substantially all risks, and it provides first-loss credit enhancement through fixed deposits and book debts. As at the date of the report, call money of ₹2.57 crore on partly paid shares remains outstanding, callable by March 2027. - A sharp FY25 portfolio deterioration forced a ₹693 crore single-quarter provision and a ₹1,225 crore loss
Major- Impairment on financial instruments rose from ₹200 crore in FY23 to ₹365 crore in FY24, and in Q2 FY25 the company recognised a ₹693 crore credit cost after auditor review. Full-year credit cost hit 20.2% of the average loan book against 3.9% in FY24, and an accelerated write-off of ₹405 crore was executed in Q4 FY25. PAT swung from a ₹505 crore profit in FY24 to a ₹1,225 crore loss in FY25, while a restructured loan pool with an aggregate principal outstanding of ₹1,201 crore as at March 31, 2026 recorded zero borrower repayments during FY26. - Contingent liabilities swung from nil to ₹33.58 crore on disputed tax demands
Minor- The company reported no contingent liabilities as at March 31, 2023, and only a ₹2 crore FLDG fixed deposit with ₹0.02 crore exposure as at March 31, 2024. By December 2024 contingent liabilities stood at ₹33.58 crore, comprising income tax of ₹27.80 crore, GST of ₹5.00 crore, and a first-loss guarantee of ₹0.78 crore. The CIT Appeal ruled in the company’s favour during FY26, but the Income Tax Authorities filed an appeal before ITAT. - Regulator actions are limited to a settled penalty and recurring procedural filing delays
Minor- The Registrar of Companies imposed a penalty of ₹3 lakh on the company and ₹1 lakh on the erstwhile Managing Director for non-compliance with board-retirement provisions, both paid in April 2026. The company disclosed one-day and minor delays in exchange and RBI filings, and on 1 April 2025 BSE and NSE issued cautionary emails for failing to disclose a GST show-cause notice within 24 hours. - Deloitte Haskins & Sells completed its term and was replaced by B.K. Khare & Co. with no auditor resignations
Clean- Deloitte Haskins & Sells served from the 28th AGM through the 31st AGM on 22 July 2025, when its tenure expired. Shareholders appointed B.K. Khare & Co. as statutory auditor on the same date with 99.9999% of votes in favour. No auditor resigned in any reported year.
What to watch
- Income tax appeal. The Income Tax Authorities’ appeal before ITAT regarding the ₹27.80 crore demand for FY 2019-20 and FY 2020-21 was pending as of the FY26 Annual Report.
- Restructured loan recovery. The ₹1,201 crore restructured loan pool that generated zero borrower repayments in FY26 awaits recovery as of the FY26 Annual Report.
- Rights issue utilisation. ₹403.44 crore of rights issue proceeds remained unutilised as of the FY26 reporting date.
- Covenant breach classification. Long-term borrowings may be classified as current and repayable on demand if future covenant breaches occur, per the company’s disclosure on the Ind AS 1 amendment in the FY26 Annual Report.
Bottom line: This is a disclosed but deeply stressed record in which a large credit-loss charge, covenant breaches, and governance exits concentrate the risk. The FY26 modest profit rests on a deferred tax asset and borrowings that understate economic obligations. Watch whether the restructured book produces cash, and whether the borrowings stay long-term or tip into demand classification.