Lloyds Enterprises Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

Lloyds Enterprises carries an unqualified audit record across seven years, but that record is now overshadowed by a SEBI show-cause notice alleging a decade of undisclosed related parties, misstated financials, and diversion of ₹145 crore. The operating model compounds the concern: cumulative cash from operations is negative ₹395 crore over ten years, the company has suspended interest income on a ₹638 crore related-party NCD, and it is seeking shareholder approval for ₹2,900 crore in related-party caps with entities whose own revenues are a fraction of those limits.

Key findings

  1. SEBI alleges a decade of hidden related parties and ₹145 crore in diverted funds Critical - SEBI issued a show-cause notice on 9 July 2025 alleging the company failed to disclose two related parties from FY2017 to FY2023 and misstated financials by not impairing advances from FY2017 to FY2021. The notice alleges ₹144.82 crore was transferred to those entities as interest-free loans outstanding for more than ten years without any formal agreement, and that the Executive Director and CFO provided false certification to the Board. An adjudicating officer was appointed on 5 May 2025, and SEBI has since required disclosure of all enforcement actions in two pending schemes of arrangement.
  2. Loans without repayment terms jumped from zero to ₹1,000 crore in two years Major - The CARO report for FY26 records advances in the nature of loan without specified terms aggregating ₹1,000 crore to parties other than subsidiaries, JVs and associates; the auditor stated it was “unable to comment on the regularity or overdue status” of these loans. In FY24 the same CARO clause explicitly stated no such advances had been granted, and in FY23 the company had only made investments. The company also stopped maintaining location records for its fixed assets in FY25 and FY26, a deficiency absent in the five prior years.
  3. Shareholder vote sought for ₹2,900 crore in RPT caps with thinly capitalised promoter entities Major - The company seeks omnibus approval for related-party caps totalling ₹2,900 crore across seven promoter-linked entities, including ₹1,000 crore with Lloyds Realty Limited and ₹500 crore with Lloyds Realty Developers Limited. The proposed cap with LRDL equals 668% of that entity’s standalone turnover of ₹53.44 crore, and the cap with Indrajit Properties equals 936% of its ₹29.94 crore turnover. The company has already subscribed to ₹638 crore of NCDs issued by LRDL and invested a further ₹555 crore in warrants of two group entities in the first nine months of FY26.
  4. A decade of negative operating cash flow sits beneath reported profits Major - Cumulative cash from operations over ten years is negative ₹395 crore against cumulative reported profit of ₹857 crore, a cash conversion ratio of -0.46x. In FY26, other income of ₹423 crore made up 90.4% of profit before tax, while standalone operating cash flow was negative ₹361 crore against a PAT of ₹375 crore. Of the ₹992 crore rights-issue proceeds proposed in FY26, ₹59 crore was used to subscribe to a group entity’s rights issue and ₹36 crore to repay a loan from a firm that transacts with other Lloyds group companies.
  5. ₹59 crore of annual interest income suspended on a related-party NCD ahead of a merger Major - The company did not recognise interest income on ₹638 crore of NCDs issued by Lloyds Realty Developers Limited at a 9.25% coupon, stating the receivable and accrued interest would be extinguished upon a pending amalgamation. The Board approved the composite scheme on 22 December 2025 with an appointed date of 1 April 2026; the scheme is pending SEBI no-objection and NCLT filing. Separately, the company amortises equity-issue expenses over ten years, a policy disclosed consistently since FY21.
  6. Promoters hold near-total voting control while institutions uniformly oppose RPT and pay resolutions Major - Promoters held 62.72% of voting capital and cast 100% of their votes in favour of all resolutions at the 40th AGM on 9 July 2026, including the upward revision of the Chairman’s remuneration to ₹1.80 crore per annum. Public institutional shareholders voted 94.92% against that remuneration revision and 100% against all six material RPT resolutions at the postal ballot concluded 19 May 2026. Managerial remuneration rose 70.56% in FY2025-26 while median employee remuneration rose 32.93%.
  7. Borrowing headroom expanded to ₹3,000 crore while a term loan is secured by pledged subsidiary shares Minor - Shareholders approved an increase in borrowing limits to ₹3,000 crore via postal ballot on 19 May 2026, up from the previous ₹2,000 crore limit set in January 2015. Standalone borrowings stood at ₹483 crore and consolidated at ₹798 crore as of FY26, leaving substantial undrawn headroom. A ₹150 crore term loan raised in FY25 is secured by a pledge of shares held in subsidiary Lloyds Engineering Works Limited.
  8. The statutory auditor rotated on schedule after completing its maximum two-term tenure Clean - M/s Todarwal & Todarwal LLP completed two consecutive five-year terms ending at the 40th AGM in 2026, and the Board recommended M/s V. K. Beswal & Associates for the next five-year term. No auditor resigned during FY25 or FY26, and consolidated audit fees remained modest, ranging from ₹3.00 lakhs to ₹7.50 lakhs over the past five years.

What to watch

Bottom line: This is a record where the statutory audit opinions are clean but the operating cash flows are not, and where a regulator has formally alleged concealment and diversion. The capital-allocation pattern channels rights-issue proceeds and shareholder-approved RPT caps toward promoter-linked entities with thin standalone revenues, while interest income on a large related-party NCD has been suspended ahead of a merger. Watch the SEBI proceedings and the NCLT scheme timeline: together they will determine whether the structures that currently sit in the notes to the accounts become crystallised losses or are ratified and closed.