Indo Borax & Chemicals presents a record of unqualified audit opinions and a clean FY26 working-capital reconciliation, but the year was defined by a complete change of control, a ₹5.09 crore loan stuck in insolvency for four years, and the sale of non-core assets including flats and cars to fund a special dividend. The new promoter pledged the entire acquired stake to finance the takeover, and public institutional shareholders voted against the ESOP plan.
Key findings
- A ₹5.09 crore loan to an insolvent entity has no repayment schedule and no interest for four years
Major- The company gave an inter-corporate deposit of ₹5.09 crore to Radius Estate Projects, which entered IBC insolvency; no interest has been provided from FY23 through FY26 due to uncertainty of realisation. The auditor's CARO report states that no schedule of repayment or interest has been stipulated, and the auditor is unable to comment on regularity. An Emphasis of Matter, a special call-out in the audit report, has appeared every year from FY2022 through FY2026 flagging the pending NCLT decision. - Promoter shareholding changed hands entirely, and the new promoter pledged the whole stake
Major- The Jain promoter group sold its entire 50.80% holding to Zenrock Chemicals on 15 December 2025. Zenrock pledged 30.80% of Indo Borax's share capital on 3 February 2026 and another 7.62% on 12 May 2026, encumbering the full 38.41% promoter stake to secure acquisition debt. Sunil Malhotra, the ultimate beneficial owner, pledged 100% of his shareholding in the acquirer on 31 October 2025 in favour of Catalyst Trusteeship as debenture trustee. - The acquirer financed the takeover with ₹465 crore in secured instruments backed by a pledge over Indo Borax shares
Major- Zenrock Chemicals issued ₹390 crore in secured NCDs and ₹75 crore in CCPS in October-November 2025, secured by a first-ranking pledge over up to 99.90% of the acquirer's equity and 100% of the target company shares. On the Q4 FY26 earnings call, management described the company as having "zero debt," but when an analyst asked about "Rs.400 crores of debt to finance" the acquisition, the question was deflected to investor relations. - New MD & CEO appointed at up to ₹7 crore plus ESOPs of 5% of diluted capital
Major- Mr. Suresh Kalra, appointed effective 23 January 2026, receives a salary of ₹3.50 crore per annum plus a performance bonus of up to ₹3.50 crore, and is eligible for ESOP grants representing up to 5% of fully diluted capital. Public institutional shareholders voted 51.19% against the ESOP plan on 8 May 2026. - Operating cash flow cumulatively trails EBITDA, and other income contributed 38.5% of profit before tax in FY26
Minor- Cumulative CFO of ₹189 crore covered only 54% of cumulative EBITDA of ₹353 crore over the ten years through FY26. FY26 other income of ₹25.58 crore represented 38.5% of profit before tax of ₹66.5 crore. The company declared a special dividend of ₹30 per share in FY26, which management stated was funded by sale of "non-core assets" including "flats and cars". - Audit opinions have been clean for seven years, but the same ₹5.09 crore loan has been flagged in every CARO report since FY2022
Minor- The statutory auditor has issued unqualified opinions every year from FY2020 through FY2026, with no Key Audit Matters identified. CARO clause (iii) has reported every year from FY2023 through FY2026 that the ₹5.09 crore loan has no stipulated repayment schedule. FY2025 quarterly stock statements filed with banks showed differences from the books in all four quarters; FY2026 statements showed differences of ₹95.81 lakh and ₹52.01 lakh in Q1 and Q2 respectively. - Treasury holdings shifted from fixed deposits to mutual funds, with a disclosed capital commitment for two flats
Clean- Mutual fund investments increased by ₹130 crore as fixed deposits matured, described by management as for "short-term investment only" given "CAPEX expansions". CWIP of ₹1.13 crore as of FY26 represents an advance for two flats in the Avenue 54 project at Santacruz, Mumbai, with a balance commitment of ₹20.86 crore disclosed in FY23.
What to watch
- ₹5.09 crore inter-corporate deposit. Resolution remains pending before the NCLT as of the FY2025-26 Annual Report.
- Section 186 limit. Shareholder approval for loans, guarantees and investments exceeding the Section 186 limit was obtained on 11 May 2026; deployment has not been reported.
- ESOP 2026 vesting. Grants to Mr. Suresh Kalra and other employees, representing up to 5% of fully diluted capital, are subject to future vesting and exercise.
- Scheme of Amalgamation. The merger of Indoborax Infrastructure Private Limited into the parent is subject to NCLT and regulatory approvals as announced on 21 July 2026.
Bottom line: This is a company whose financial statements carry clean audit opinions, but the year was dominated by a leveraged change of control and a series of transactions that moved assets and authority between the old and new promoter groups. The ₹5.09 crore loan stuck in insolvency has been flagged by auditors for four years without resolution, and the new promoter's entire stake is pledged against acquisition debt. Watch the NCLT outcome on the inter-corporate deposit, any deployment under the enabling resolution, and whether the promoter pledge holds under stress.