One 97 Communications' record carries unqualified audit opinions every year from FY2022 through FY2026, yet the same filings disclose a cluster of unresolved regulatory demands, repeatedly extended related-party loans, and write-downs that have left goodwill at nil. The largest single item is a ₹5,712 crore GST show-cause notice against a joint venture, roughly 136 times the company's disclosed contingent liabilities, while the profit line itself leans heavily on exceptional gains and other income.
Key findings
- A ₹5,712 crore GST notice against a JV dwarfs disclosed liabilities
Critical- First Games Technology Private Limited, a joint venture, received a show-cause notice dated April 28, 2025 proposing GST liability of ₹5,712 crore plus penalties for January 2018 to March 2023. The company's total consolidated contingent liabilities were ₹42 crore as at March 31, 2026, down from ₹58 crore a year earlier. A separate ₹1,081 crore UP GST demand is stayed by the Allahabad High Court, and the Enforcement Directorate's February 27, 2025 notice alleges FEMA contraventions of approximately ₹611 crore. - Unqualified opinions coexist with recurring loan and audit-trail exceptions
Major- S.R. Batliboi & Associates issued unqualified opinions every year from FY2022 through FY2026, with an Emphasis of Matter on the FEMA notice in FY2026. Yet the CARO annexures report loan repayment exceptions in four consecutive years and amounts overdue more than 90 days in every year, reaching ₹56 crore across four cases as at March 31, 2026. The audit-trail exception under Rule 11(g), where the auditor could not confirm the trail operated throughout the year, persisted until FY2026, the first year with no such exception. - Related-party loans stay overdue for years while a ₹974.62 crore transfer skipped shareholder approval
Major- Four loans had ₹54 crore of principal and ₹2 crore of interest overdue more than 90 days as of March 31, 2026, totalling ₹56 crore. This included ₹23 crore overdue 1,552 days and ₹19 crore overdue 1,490 days. The company transferred its Offline Merchant Payments Business to wholly owned subsidiary PPSL for ₹974.62 crore, effective November 30, 2025, with board approval on October 15, 2025. The transfer qualified as a related-party transaction but was exempted from shareholder approval because PPSL is a wholly owned subsidiary whose accounts are consolidated. - A cascade of regulator actions, from a bank licence cancellation to SEBI settlements
Major- RBI cancelled the banking licence of associate Paytm Payments Bank effective April 24, 2026, and shareholders approved winding-up the next day. SEBI settled two matters: a May 8, 2025 order over ESOP grants to the MD & CEO, with total payments of ₹2.79 crore, and a January 17, 2025 order against eight directors and an officer settled for ₹3.32 crore. The ED's FEMA notice of February 27, 2025 has been substantially resolved through RBI compounding and compliance findings, and GST penalty orders against the company and its CEO were reduced to ₹59,69,889 each, with appeals pending before GSTAT. - Reported profit leans on exceptional items and other income
Major- FY2025 consolidated PAT of ₹(663) crore included a ₹1,346 crore gain from selling the entertainment ticketing business to Zomato, and FY2026 carried a ₹190 crore charge for the First Games loan impairment. Other income was 88.9% of profit before tax in the latest year, and the average effective tax rate was 6.3% against a statutory 25.2%. Deferred tax assets went unrecognised in every year from FY2022 through FY2026 because management saw no probable taxable profits. - Cash conversion is weak and volatile, with a buyback favoured over dividends
Major- Consolidated operating cash flow was negative ₹743 crore in FY26 against PAT of ₹552 crore, and negative in three of the last five years. The company bought back shares worth ₹8,498 crore between December 2022 and February 2023 while declaring no dividends in FY2023 through FY2026. Un-utilised IPO proceeds stood at ₹1,986 crore as at March 31, 2026.
What to watch
- Supreme Court ruling on the GST notice. First Games' writ petition challenging the ₹5,712 crore notice was pending as of the FY2025-26 Annual Report dated May 6, 2026.
- ED FEMA proceedings. The February 27, 2025 show-cause notice remained pending as of the FY2025-26 Annual Report.
- GSTAT appeals. The company and its CEO appealed GST penalty orders on June 27, 2026, with the appeals pending.
- Overdue loan recovery. Whether the ₹56 crore in loans overdue more than 90 days as of March 31, 2026 gets repaid or extended again.
- Paytm Payments Bank winding-up. Completion date was not determinable as of the April 25, 2026 announcement.
Bottom line: This is an audited record with clean opinions, but the substance sits in the disclosures around them: unresolved regulatory demands far exceeding disclosed liabilities, related-party loans that stay overdue for years, and a profit line that depends on exceptional gains and other income. The risk is concentrated in litigation outcomes and capital allocation, with the GST notice against a joint venture pending before the Supreme Court and overdue loans that have remained unpaid for more than 1,400 days in two cases.