Power Mech Projects Ltd Forensic Report - SOIC x StockScans Report

as of Aug 2026

Power Mech Projects' record carries a clean audit opinion, but the underlying picture is more layered. A ₹59 crore tax provision from a 2022 search, a brief insolvency admission in early 2025, and a ₹455 crore corporate guarantee all sit alongside a ten-year cash conversion ratio of just 32%. The group's structure, with over 30 entities and several unaudited subsidiaries, adds further opacity to the financial statements.

Key findings

  1. A ₹59 crore tax provision from a 2022 search remains unchallenged Major - The Income Tax Department conducted a search under Section 132 in July 2022, leading to a ₹51.38 crore provision (including interest) for FY2023-24 and an additional ₹7.65 crore for FY2024-25. Management decided not to appeal the completed assessments, despite the company voluntarily admitting ₹107.68 crore of income. The FY2023 consolidated auditor's report flagged this as an Emphasis of Matter, with the investigation still pending.
  2. An insolvency petition was admitted, then withdrawn, within days Major - NCLT Hyderabad admitted a Section 9 petition from M/s. Largess Engineering on 31 January 2025, initiating CIRP over an alleged ₹9.37 crore debt. The company filed for withdrawal under Section 12A on 4 February 2025 after an amicable settlement, and the petition was disposed of with the moratorium vacated.
  3. A ₹455 crore corporate guarantee exceeds annual profit Major - On 30.09.2025, the company issued a corporate guarantee to HDFC Bank for ₹455 crore as security for facilities to its wholly owned subsidiary Deoghar Ring Road Projects Private Limited. This contingent liability exceeds the ₹420 crore annual PAT, and is secured against future annuity receipts.
  4. Operating cash flow covered only 32% of EBITDA over ten years Major - Cumulative operating cash flow of ₹1,061 crore covered just 0.32x of cumulative EBITDA of ₹3,300 crore through FY2026. FY2025 CFO collapsed to ₹0.74 crore against PAT of ₹348 crore, while FY2026 CFO of ₹387 crore covered 0.94x of PAT of ₹412 crore. Free cash flow was negative ₹159 crore in FY2025, and the Board proposed a ₹1.50 per share dividend for FY2026 on 20 May 2026.
  5. Revenue relies on estimates for uncertified work, with receivables growing Major - Revenue is recognised using the percentage of completion method, with uncertified work recognised based on management estimates, a Key Audit Matter for FY2024-25. Uncertified revenue totalled ₹560.12 crore as on 31.03.2023, up from ₹431.65 crore a year earlier. The largest customer receivable rose from ₹95.06 crore in FY2021 to ₹286.50 crore by 31 March 2026, against a stated 30-day credit period.
  6. Related-party loans carry no repayment terms or interest Major - The FY2025-26 auditor's report states loans to subsidiaries have no repayment schedule, and the FY2024-25 report notes no repayment terms or interest on some loans. Shareholders approved RPT limits of ₹1,500 crore for civil works and ₹400 crore for guarantees with Kalyaneswari Tasra Mining in September 2025. Loans to related parties outstanding as on 31 March 2023 aggregated ₹42.74 crore with no repayment terms specified.
  7. Supplier-finance payables and personal guarantees understate leverage Major - Supplier finance payables grew to ₹80.29 crore in FY2025-26, up from ₹58.28 crore, with interest rates of 6.70% to 7.20%. Working capital loans are secured by equitable mortgage of personal properties of the Managing Director, a director, and a firm, with personal guarantees from the MD and a director. Shareholders approved an increased borrowing limit of ₹4,000 crore on 23 December 2025.
  8. A 30+ entity group with unaudited subsidiaries and three struck off Major - The group comprised 14 Indian subsidiaries, 3 foreign subsidiaries, 14 Indian JVs, 2 foreign JVs, and 2 foreign associates as of 31 March 2025. Three wholly owned Indian subsidiaries were voluntarily struck off during FY2025-26. Unaudited overseas subsidiaries held ₹29.31 crore in assets, and unaudited Indian LLPs held ₹168.57 crore, with the FY2026 auditor's report noting certain overseas reports were not issued till 20 May 2026.

What to watch

Bottom line: This is a company with a clean audit opinion but a complex financial structure. The risk sits in cash conversion, related-party arrangements, and a growing web of guarantees and group entities. Watch whether the largest customer receivable of ₹286.50 crore is collected, and whether uncertified revenue ageing continues to grow beyond the ₹560.12 crore reported as on 31.03.2023.