Nath Bio-Genes' own filings describe a clean record: unqualified audit opinions, no regulator penalties, and no prosecutions in every year from FY2018-19 through FY2025-26. That picture is now in question. SEBI has ordered a forensic audit covering six years, and the auditor has repeatedly flagged related-party loans, unreconciled balances, and unaudited joint-venture financials that the annual reports present as routine.
Key findings
- Interest-free loans and a ₹43.6 crore guarantee to promoter-linked entities, with land bought from related parties still unregistered
Major- In FY2026, the company granted ₹40.48 crore in loans to one related party, repayable on demand, 71.26% of total loans granted that year. Auditors were unable to comment on repayment terms for such loans in FY2021 through FY2024. A corporate guarantee of 43.6 crore for Paithan Mega Food Park Pvt Ltd stood as at March 31, 2025, and has since been withdrawn. Freehold land of 75.76 hectares bought from Agritech India Limited remained unregistered as of FY2026, as it had in every year since FY2019. - Profit leans on exceptional recoveries and a sub-10% tax rate; two versions of the FY26 equity statement appear in the same report
Major- FY2025-26 profit included ₹6.01 crore of exceptional income from recovering farmer advances written off in FY2021-22; without it, EPS was ₹17.82 versus reported ₹20.98. The effective tax rate was 8.98% against a statutory 27.82%, attributed to exempt agricultural income. The annual report contains two versions of the FY2026 Statement of Changes in Other Equity, with opening retained earnings differing by 4.28 crore, both signed by the same auditor and dated 04 May 2026. - Operating cash flow has been weak and volatile, with management calling a negative year a "calculation issue"
Major- FY26 standalone operating cash flow was negative ₹12.57 crore against PAT of ₹41.63 crore. Management acknowledged inventory-driven cash absorption of -₹22 crore, -₹108 crore, and -₹113 crore across three years, and framed the negative cash flow as a "calculation issue" tied to year-end cash balances. A final dividend of ₹2 per share was recommended for FY2022 despite a net loss of ₹67.39 crore. - "Debt free" claims sit alongside working-capital borrowings and bank-statement deviations
Major- Management claimed "long-term debt free status" in FY2020-21 and FY2021-22, and "Nil Debt at Balance Sheet" in FY2018-19, while the company held working-capital borrowings secured on current assets in each of those years. In FY2025-26, the company's current borrowings from a consortium of banks of ₹9,274.80 lakhs were secured by hypothecation of stock and receivables, collateral land, and personal guarantees from two promoters. Quarterly security statements filed with banks showed deviations from books in every quarter of FY26, which the company attributed to specific exclusions such as breeder seeds and unbilled seeds. - Auditor change in FY2022-23 was routine, with no resignations on record
Clean- M/s Gautam N Associates was appointed for five years from the 29th AGM to the 34th AGM in 2027, confirmed by an ordinary resolution on 30 June 2022. The firm issued unqualified consolidated opinions for FY2022-23, FY2024-25, and FY2025-26. CARO reports from FY2022-23 through FY2025-26 each state no resignation of statutory auditors occurred during the year.
What to watch
- Forensic audit outcome. SEBI-appointed CNK & Associates LLP is covering FY 2020-21 to FY 2025-26, initiated by communication received 05 August 2026.
- FY2026-27 audit opinion. It will show whether the Labour Codes provision assessment is completed and whether the qualified Q3 FY2026 and Q1 FY2027 reviews are resolved.
- Equity statement correction. Whether the two conflicting versions of the FY2025-26 Statement of Changes in Other Equity are corrected or explained, anchored to the annual report dated 04 May 2026.
- Income tax appeals. Resolution of demands totalling 63.81 crore pending before CIT(A), Chhatrapati Sambhajinagar as at March 31, 2026.
- Land registration. Freehold land from Agritech India Limited and plots from Paithan Mega Food Park Pvt Ltd remain unregistered as of the FY2025-26 Annual Report.
Bottom line: This is a record with clean audit opinions and a routine auditor change, but the SEBI-ordered forensic audit puts those opinions in a different light. The recurring pattern is related-party money movement, interest-free loans, a corporate guarantee, unregistered land purchases, alongside accounting choices that flatter profit and a cash flow that does not back it. Watch the forensic audit outcome and whether the FY2026-27 annual audit resolves the qualifications.