Globus Spirits' record carries a qualified audit opinion, a ₹40.94 crore tax demand from a 2023 search, and a pattern of shareholder opposition to promoter pay. Its cash conversion is strong, but capital allocation and related-party flows need scrutiny.
Key findings
- A ₹40.94 crore tax demand from the 2023 search is unprovided and the FY2023-24 audit was qualified
Critical- The Income Tax Department's search (January 30-February 3, 2023) led to assessment orders disallowing expenses, creating a ₹40.94 crore demand for three years, of which ₹30.44 crore was paid under protest with no provision made. The FY2023-24 auditor issued a qualified opinion, unable to assess the consequential impact of the ₹35.61 crore demand. The company has appealed to CIT(A). - A DGGI GST search left ₹34.46 crore deposited under protest, with no provision
Major- The DGGI's June 26, 2020 search on Animal Feed Supplement classification led to a ₹34.46 crore deposit under protest (tax ₹27.41 crore, interest ₹4.51 crore, penalty ₹2.54 crore). Writ petitions challenging the GST's constitutional validity are pending before the Delhi High Court. - Promoter remuneration tripled while institutional shareholders repeatedly voted against pay and board resolutions
Major- Ajay Kumar Swarup's approved monthly basic salary rose from ₹7,29,167 in 2020 to ₹22,68,000 in 2026, with the incentive ceiling rising from ₹50 lakh to ₹3.60 crore annually. At the 31 August 2024 AGM, institutions voted 49.22% against remuneration resolutions and 80.37% against adopting FY2023-24 financials. Three independent directors resigned effective 30 May 2024. - Capital has repeatedly flowed to promoter-linked entities
Major- A subsidiary, Unibev Limited, had outstanding investment and loans of ₹42.86 crore as at March 31, 2021, with loans lacking repayment schedules. The company acquired 8.53 crore of investments in Globus ANSA Private Limited. Promoter-controlled landlords collected rent, and a foundation received CSR fees. - Goodwill and subsidiary investments remain unimpaired despite underlying losses
Major- Goodwill recoverable amounts declined to ₹13.96 crore in FY2025-26 from ₹14.55 crore, with no impairment recognised. A subsidiary with negative net worth was deemed recoverable. A newly acquired business generated ₹1.12 lakh revenue against ₹94.44 lakh losses. - Reported profits have been shaped by accounting-policy choices
Major- A tax-rate switch released 30.04 crore of deferred tax liability into the P&L. A compensated-absences amendment added ₹3.2 crore of past-service cost. FY2024-25 comparatives were restated under Ind AS 8 for reclassification errors. - Operating cash flow beats PAT, but short-term borrowings fund long-term assets
Major- CFO/PAT was 2.94x in FY26, though free cash flow was negative in FY25 and FY24. CARO reported short-term borrowings of ₹5,426.00 lacs used for property, plant and equipment in FY25. A suspended project carries ₹6.23 crore of land and pre-operative costs since 2022. - Auditor rotation followed two completed terms, with no adverse actions
Clean- Deloitte completed its second four-year term, and Walker Chandiok & Co. LLP was appointed with 100% shareholder approval. No auditor resignation was reported in FY2023-24 through FY2025-26.
What to watch
- Income-tax appeal. The CIT(A) appeal against the ₹40.94 crore demand was pending as of the FY2025-26 Annual Report.
- GST writ petitions. The Delhi High Court challenge on the ₹34.46 crore deposit was pending as of the FY2025-26 Annual Report.
- 15 September 2026 AGM. Shareholders will vote on the MD's re-appointment and remuneration for four executive directors.
- ESOP 2025-A. A scheme for up to 2,90,679 options is to be voted at the 15 September 2026 AGM.
- Suspended plant. An extension application for the commercial production timeline was pending after the FY2025-26 year-end.
Bottom line: This is a record with real cash generation and a routine auditor transition, but the qualified opinion and the unprovided tax demand set the tone. The risk character is concentrated in governance: promoter pay, related-party flows, and accounting choices that shape reported profit. Watch the appeal outcomes and the September AGM votes.