Modi Naturals’ record is one of rapid transformation: consolidated revenue has more than doubled in two years to ₹719 crore, driven almost entirely by a wholly owned ethanol subsidiary that now delivers 80% of group profit. The audit opinions have been unqualified throughout, and operating cash flow has turned sharply positive in the last two years. Three things deserve attention: the parent has seen two statutory auditor resignations in four years; the board has repeatedly asserted that no related-party transactions require shareholder approval, even as the parent funnels capital into the subsidiary and earns rising interest and fees back from it; and the parent has carried bank-return differences in its CARO report every year since FY22.
Key findings
- Two statutory auditor resignations in four years, latest replaced by subsidiary’s auditor
Major- M/s K.K. Jain & Co. resigned on 11 August 2023 and M/s Doogar & Associates resigned on 13 May 2026; the Board appointed M/s B. Chhawcharia & Co. the same day, describing the move as a planned succession to align audit processes across the group. The Secretarial Auditor, M/s Deepak Bansal & Associates, also resigned effective 6 July 2026, with the Board appointing a replacement the same day. - The parent has put ₹35 crore into the ethanol subsidiary and earns rising interest and fees back from it, while the board says no RPTs need shareholder approval
Major- Total investment in Modi Biotech stood at ₹35 crore through FY2025-26, split equally between equity shares and zero-interest optionally convertible debentures. In FY2024-25 the parent advanced a loan of 1.7 crore to the subsidiary, received interest of 2.04 crore and earned other income of 1.6 crore, with the outstanding loan including interest at 18.76 crore. The Board’s report for every year from FY2019-20 through FY2025-26 states that no materially significant related-party transactions required shareholder approval under the Listing Regulations. - Three related Modi family members hold all executive roles with rising pay, and a gift transfer during a closed trading window drew a warning
Minor- Anil Modi, Akshay Modi and Aditi Modi are relatives and together hold all three executive director positions. Their aggregate remuneration rose from ₹110.76 lakhs in FY2021-22 to ₹2,18,16,000 in FY2025-26. An inter-se gift transfer of 22.040% of voting capital between 6 December 2022 and 6 January 2023 occurred during a closed trading window, resulting in a warning letter to the promoter. - Two offshore subsidiaries named in FY24 filings have vanished from later disclosures without explanation
Minor- The FY24 AOC-1 statement listed subsidiaries in Mauritius and Dubai alongside Modi Biotech; from FY25 onward only Modi Biotech appears, and no liquidations or sales were reported. Modi Biotech itself was incorporated on 27 April 2021 as a pre-operative entity and grew to total assets of ₹278.12 crore (before consolidation adjustments) and a net profit of ₹40.27 crore (before consolidation adjustments) by FY26. - An inventory valuation change lifted FY22 profit, and an insurance claim is excluded from management’s headline EBITDA
Minor- A change from Weighted Average Cost to FIFO in FY22 increased standalone profit and closing inventory by ₹2.95 crore; the auditor drew attention to the change without qualifying the opinion. In FY26, an insurance claim of ₹4.86 crore received by the subsidiary was treated as an exceptional item, and management presents EBITDA of ₹73.5 crore excluding it. - Management refuses to disclose product-level revenue splits within the consumer division
Minor- Management declined to provide a revenue or EBITDA margin breakup between the Oleev brand and other ready-to-eat brands, stating “we typically don’t share this breakup” and “we don’t give the breakup”. Consolidated revenue grew from ₹400 crore in FY24 to ₹663 crore in FY25 and ₹719 crore in FY26, with the ethanol segment contributing ₹337 crore at a PBIT margin of 16.89% [SQL]. - Operating cash flow has turned sharply positive after years of weak conversion
Clean- Cumulative CFO of ₹94 crore over six years covered 55% of cumulative EBITDA of ₹171 crore. Standalone CFO was negative in FY22, FY23 and FY24, then turned positive at ₹48.79 crore in FY25 and ₹61.06 crore in FY26. The company invested ₹35 crore in Modi Biotech during FY24, and the Board’s report for FY23 noted that equity infusion into the subsidiary increased working capital borrowing.
What to watch
- Auditor appointment vote. Shareholder vote on the regularisation and five-year appointment of M/s B. Chhawcharia & Co. as Statutory Auditors at the 52nd AGM on 31 July 2026.
- Subsidiary factory fire claim. Settlement of the insurance claim for the 30 September 2025 fire, which will determine the final profit or loss beyond the ₹10.00 crore exceptional loss already booked.
- Refinery fire claim. Settlement of the December 2021 refinery fire insurance claim, pending as of the FY2025-26 annual report.
- Convertible debentures. Conversion or redemption of the 17,50,000 zero-interest optionally convertible debentures in MBPL, exercisable at the parent’s option anytime before 31 March 2041.
Bottom line: This is a disclosed and audited record of a company that has transformed itself through a subsidiary whose audit trail and governance sit at arm’s length from the parent. The pattern of auditor departures, the board’s blanket assertion that no related-party transactions need shareholder approval, and the parent’s recurring bank-return differences together form a governance picture that asks for scrutiny. Watch the AGM vote on the new auditor and whether the subsidiary’s CARO differences finally close.