Karma Energy’s record is clean on its face: seven years of unqualified audit opinions and a group structure simplified to zero subsidiaries. Two things deserve attention: the company is seeking shareholder approval for inter-corporate deposit limits with two promoter-group NBFCs that dwarf its own turnover, and an equity investment of ₹76.27 lakh in a promoter-group entity sat on the books without impairment classification as a subsidiary, associate, or joint venture.
Key findings
- Proposed RPT limits with two promoter-group NBFCs exceed 1,100% of turnover
Major- For FY2026-27, the company seeks approval for borrowing and ICD placement limits of ₹50 crore each with Tapi Energy Projects Ltd (TEPL) and ₹50 crore each with Windia Infrastructure Finance Ltd (WIFL), totalling ₹200 crore. The proposed transactions represent 1,149% of Karma Energy’s annual consolidated turnover, and 7,755% and 1,910% of the counterparties’ own turnover respectively. A prior contravention in obtaining shareholder approval for a Material RPT with TEPL and failure to update the Related Party policy drew a SEBI penalty of ₹2.00 lakh via an order dated 10 July 2025. - A shell entity was acquired and resold to a promoter-group company within two months
Minor- On 25 October 2024, the company acquired 100% of Bay Wind Projects Private Limited, a shell with nil turnover, at face value. On 30 December 2024, it sold the stake to promoter-group entity Ram Krishna Iron Works Private Limited for ₹1,00,000. The company also held an equity investment of ₹76.27 lakh in Tapi Energy Projects Ltd as at 31 March 2026, an entity not classified as a subsidiary, associate, or joint venture. - Contingent liabilities are dominated by a ₹2.40 crore income-tax dispute
Minor- Disputed income-tax liabilities stood at ₹2.40 crore as of the FY2025-26 annual report, down from a peak of ₹3.34 crore that persisted from FY2021-22 through FY2024-25. A GST demand of ₹39.09 lakh for FY2018-19 remains pending before the GST appellate authority. A SEBI penalty of ₹29.25 lakh, first disclosed in FY2024-25, continues to be reported as a contingent liability in FY2025-26. - Revenue quality is weakened by chronic utility-receivable delays and a collapsed REC stream
Minor- Trade receivables outstanding for more than three years stood at 1.23 crore as of 31 March 2026. Revenue from Renewable Energy Certificates collapsed from ₹7.48 crore in FY2019-20 to ₹0.18 crore in FY2020-21 after the regulator reduced the floor price to zero. A switch from third-party sales to state utility sales for the 18MW Satara wind farm from January 2022 cut gross realisation from over ₹6 per unit to ₹2.52 per unit. - A prior-period restatement and a reserve-injecting amalgamation obscure the profit picture
Minor- Commission of ₹15.60 lakh paid to the Managing Director based on FY2024-25 profits was treated as a prior-period item, restating FY2024-25 expenses and reserves because no provision was made. The NCLT-sanctioned amalgamation of subsidiary Greenweiz Projects Limited, effective 1 April 2019, transferred reserves of ₹2.51 crore to the company with no consideration payable. The auditor identified valuation of Level-3 unquoted investments as a Key Audit Matter in FY2019-20 and FY2020-21, citing significant management judgement.
What to watch
- RPT limit utilisation. Actual utilisation of the ₹200 crore aggregate limits with TEPL and WIFL during the year ending 31 March 2027.
- SEBI scrutiny. Any further exchange or SEBI scrutiny of RPT compliance, given the prior penalty for the FY2023-24 breach.
- Income-tax dispute. Resolution of the 2.4 crore dispute for AY 2018-19, pending before the Commissioner of Income Tax Appeals as of 1 July 2026.
- MD term expiry. Chetan D. Mehra’s three-year term as Managing Director expires on 30 November 2026.
Bottom line: This is a disclosed and audited record with seven years of clean opinions and a simplified group structure. The risk sits in one place: the proposed RPT limits with two promoter-group NBFCs, which are sized at over eleven times the company’s own turnover and expose it to counterparties whose financial capacity is a fraction of the limits sought. Read the shareholder vote on those limits with that in mind, and watch whether the internal-audit weakness the auditor has flagged for five years running is finally addressed.