HEC Infra Projects Ltd Forensic Report - SOIC x StockScans Report

as of Aug 2026

HEC Infra Projects' record shows a company whose reported profits have not translated into cash, whose auditor has repeatedly flagged accounting deviations while still signing clean opinions, and whose board filings on indebtedness contradict its own annual report. The company has also changed statutory auditors twice in five years, and its receivables have ballooned with no provisions. The cleanest part of the record is structural: no subsidiaries, associates, or joint ventures in any year.

Key findings

  1. Operating cash flow has been negative or minimal in three of the last five years despite growing profits Major - Cumulative operating cash flow was ₹-21 crore against cumulative PAT of ₹34 crore over nine years, a CFO/(PAT−other income) ratio of -0.89x. CFO/PAT was -2.81x in FY25 (CFO ₹-26.00 crore vs PAT ₹9.24 crore) and -6.98x in FY22, though it recovered to 0.24x in FY26. Management attributed the FY25 negative cash flow to "strategic investments in working capital" for a larger order book.
  2. Auditor's clean opinions mask a recurring pattern of unquantified accounting deviations Major - For FY2024-25, the auditor issued an unqualified opinion but included four Emphasis of Matter paragraphs: gratuity not actuarially valued under Ind AS 19, no ECL impairment on receivables under Ind AS 109, MSME dues with interest unprovided, and no comprehensive stock register, with profit and retained earnings "may be overstated." The FY2023-24 report carried a similar qualification on gratuity and leave encashment. The FY2025-26 report contains no Key Audit Matters.
  3. Reported "zero financial indebtedness" filings contradict actual bank borrowings Major - A board meeting dated 12 November 2025 disclosed total financial indebtedness as 0, yet rated facilities on 4 October 2025 comprised Bank of India Cash Credit of ₹17 crore, Bank Guarantees of ₹27 crore, and Aditya Birla Finance Purchase Finance of ₹3 crore. The FY2025-26 annual report states these cash credit facilities are secured by hypothecation of assets, personal guarantees of directors, and personal property of Directors Shri Gaurang P. Shah & Smt Rupal G. Shah as collateral. Net debt rose to 36.96 crore as at March 31, 2025 from 26.5 crore a year earlier.
  4. Revenue is recognised only on formal customer milestone approval, yet trade receivables ballooned 3.2x Major - Trade receivables rose from 15.04 crore at March 31, 2024 to 47.51 crore at March 31, 2025, a 3.2x increase, with no provisions made. 75% of orders come from government entities, with Gujarat accounting for 89% of the order book; management cited Gujarat Energy Transmission Company taking 1-1.5 years to process final payments. Cash flow from operations swung from ₹6.99 crore in FY24 to ₹-26.00 crore in FY25 while revenue grew from ₹73.79 crore to ₹112 crore.
  5. Promoter-family entities are the counterparties to the company's loans, guarantees and RPT approvals Major - Shareholders approved Special Resolutions under Section 185 to advance loans up to ₹250 crore and under Section 186 up to ₹100 crore, far exceeding annual revenue of ₹176 crore, with Mr. Gaurang Shah, Mr. Rahul Shah and Mrs. Rupal Shah declared interested. As of FY2025-26, unsecured loans from Body Corporate and Directors have repayment terms not yet finalized, with interest charged at 4.823% p.a. on a portion of ₹57.12 lakhs attributed to Mrs. Rupal G. Shah, the rest interest-free.
  6. HEC Infra Projects has changed its statutory auditor twice in five years Major - M/s Paresh Thothawala & Co. resigned as statutory auditor effective 1 August 2025, citing "diversification in practice and pre-occupation in other assignments"; the FY2025-26 report states the outgoing auditor raised "no issues, objections or concerns." M/s KDN & Associates LLP was appointed to fill the casual vacancy effective August 1, 2025. Thothawala had itself been appointed after the resignation of M/s Parth P Shah & Co. at the 18th AGM.
  7. Bank guarantee contingent liabilities have tripled, and a disputed VAT demand remains unresolved Minor - Contingent liabilities for bank guarantees stood at 26.22 crore as of FY2025-26, up from 8.1 crore in FY2020-21. A Gujarat VAT demand of ₹63 lakhs for FY2017-18 remained disputed and unprovided for in FY2024-25, with management opining the demands are "not genuine."
  8. Promoter family controls board and management while three Independent Director cohorts rotated out Minor - The board has been composed of the same promoter family inter-se relationship across FY2021-22 through FY2025-26: Mr. Gaurang Parmanand Shah (Managing Director) and Mrs. Rupal Gaurang Shah (Director) are husband and wife, and Mr. Rahul Gaurang Shah (Director) is their son. Three Independent Directors stepped down on January 25, 2025, and three new ones were appointed the same day; a prior cohort had stepped down on April 24, 2023. No remuneration or sitting fees were paid to Independent Directors in FY2025-26, FY2024-25, FY2022-23, and FY2021-22.
  9. HEC Infra Projects Ltd has consistently reported no subsidiaries, associates, or joint ventures Clean - The company reported "No company became or ceased to be subsidiary, joint venture or associate during the year" in FY2025-26, FY2024-25, and FY2021-22, and "No subsidiary, joint venture or associate at beginning or end of the year" in FY2020-21. CARO clause xxi in FY2025-26 confirms no subsidiaries/associates/JVs and that financial statements are prepared solely on a standalone basis.

What to watch

Bottom line: This is a record where the auditor's clean opinions sit alongside its own admissions that profit may be overstated, where board filings say zero debt while the annual report shows ₹17 crore of cash credit secured by directors' personal properties, and where cash flow has not followed profit. The risk is concentrated in governance and collectability: watch the FY2026-27 audit report for whether the flagged deviations are finally fixed, and track the receivables line against the order book.