Laxmi Organic’s record shows consistent unqualified audit opinions and a clean fraud-and-wilful-defaulter history, but the FY26 profit rests on a single accounting change that absorbed a ₹112.92 crore depreciation charge, while heavy capex has pushed free cash flow to ₹-427 crore and ROCE to 4.3%.
Key findings
- A depreciation-method change turned a pre-tax loss into a pre-tax profit
Major- The Company switched from written down value to straight line depreciation in FY26, lowering the year’s depreciation by ₹112.92 crore. Without the change, the pre-tax result would have been a loss of ₹20.34 crore instead of a profit. The Company also recognised a ₹40.73 crore reversal of accrued wheeling and transmission charges after a favourable MERC order, and a ₹9.72 crore deferred-tax credit from a Budget proposal. - Executive-director remuneration repeatedly exceeds statutory limits, and a promoter-family director held the interim CFO role
Major- Managerial remuneration of ₹13.9 crore in FY26 exceeded Section 197 limits by ₹2.95 crore, shown as a receivable pending shareholder approval. The Company states that remuneration may continue to exceed limits in FY27 and FY28 because of likely inadequate profits. Harshvardhan Goenka, son of the Executive Chairman and an Executive Director, served as Interim CFO from 14 April 2026 to 15 June 2026 after the CFO resigned. - Loans to subsidiaries carry no repayment schedule, and a ₹20 crore advance was paid for an acquisition
Major- In FY24, the Company provided loans of ₹71.18 crore to subsidiaries with no stipulated schedule for repayment of principal or interest, so the auditor could not comment on regularity of repayments. On 9 December 2020, the Company paid an advance against shares of ₹20 crore to Ravi Goenka and Harshvardhan Goenka under a Share Purchase Agreement for the acquisition of Yellowstone Chemical Private Limited. The board’s report for FY26 states all related-party transactions were at arm’s length and in the ordinary course. - A ₹491.57 crore fluorination CGU was tested for impairment and no charge was recorded despite declining performance
Major- An impairment assessment was performed on the Fluorination business, which had a carrying amount of ₹491.57 crore, because of a decline in performance; management concluded no material charge was needed based on a value-in-use sensitivity analysis. Consolidated goodwill of ₹118.69 crore arose from an earlier acquisition and was reclassified as an Amalgamation Adjustment Deficit account upon merger under common control in FY23. - A five-year-old DRI customs-duty dispute remains unresolved without a quantified demand, and a new MSEDCL appeal carries a potential ₹40.73 crore exposure
Minor- The DRI searched the Company’s facility on 11 February 2021 over customs duty classification; the Company paid ₹3.5 crore under protest, but as of the FY26 annual report no demand has been raised and the FY21 annual report stated the total amount is neither quantifiable nor demanded. MSEDCL filed a new appeal before APTEL on 24 February 2026 challenging a favourable MERC order; the appeal has not yet been admitted, no stay has been granted, and the Company disclosed a maximum potential financial impact of approximately ₹40.73 crore plus interest if a stay is later granted.
What to watch
- Shareholder vote at the 37th AGM. The special resolution to approve minimum remuneration to Executive Directors for FY26, FY27, and FY28, and to ratify the ₹2.95 crore excess already paid, is subject to shareholder approval as of the FY26 annual report.
- Dahej Phase 2 completion. Mechanical completion and chemical charging are expected in Q1 FY27, with revenue contribution in H2 FY27.
- DRI customs-duty matter. The writ petition was filed before the Bombay High Court on 24 January 2021, and as of the FY26 annual report no demand has been raised.
- Income-tax appeal for FY21. The Company is appealing a ₹26.27 crore demand received on 26 July 2024.
Bottom line: This is a disclosed and audited record with no fraud flags, but the FY26 profit is an accounting construct that would reverse into a loss without the depreciation-method change. The real pressure is in the business: heavy capex has tied up cash, returns have halved, and a structural revenue loss in Specialties will not be replaced until FY27 at the earliest. Watch the shareholder vote on excess remuneration, the Dahej ramp-up, and whether the ₹40.73 crore MSEDCL exposure crystallises.