PPAP Automotive Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

PPAP Automotive's FY2026 record carries a clean audit opinion, but the profit that opinion certifies is no longer being made in the factory. Other income of ₹53 crore was 97.9% of pre-tax profit, operating cash flow covered 0.77 times reported profit, and a ₹49.79 crore gain on selling a joint venture did most of the heavy lifting. The group is also carrying a subsidiary that has eroded its net worth for three straight years, and the auditor has flagged it every single year.

Key findings

  1. A ₹49.79 crore JV-sale gain dominates FY26 profit, alongside one-off charges and longer depreciation lives Major - PPAP sold its entire 50% stake in PPAP Tokai India Rubber Pvt Ltd to Tokai Kogyo Co. Ltd for ₹100 crore cash, effective 1 January 2026, booking a ₹49.79 crore exceptional gain. A one-time ₹3.38 crore charge for gratuity and compensated absences followed the introduction of New Labour Codes. Dies and moulds were depreciated over 15 years in FY2024-25, versus 8 years in FY2023-24 and 6 years in FY2020-21.
  2. An impairment on a subsidiary investment and loan arrived after years of auditors saying none was needed Major - PPAP recognised an impairment loss on an investment in a subsidiary and a loan to that subsidiary as an exceptional item in FY2025-26. In FY2024-25, the auditor's key audit matter on subsidiary and JV impairments concluded "no reason to believe investments not properly valued"; in FY2023-24 it concluded investments were properly valued. The FY2025-26 KAM on the same subject carried no amounts in its text.
  3. Subsidiary stack reshaped while one unit bleeds net worth Major - The Board approved on 11 May 2026 a slump sale of the Tools Manufacturing Division to wholly owned Meraki Precision Tool Engineering Limited, targeted for completion by Q3 FY27, and a merger of wholly owned Avinya Batteries Limited into PPAP under Sections 230-232, subject to NCLT sanction. One subsidiary has had accumulated losses eroding net worth, cash losses, and current liabilities exceeding current assets in FY2024, FY2025, and FY2026, relying on the Holding Company's support. Avinya Batteries Limited alone lost 8.22 crore in FY2023-24, 63.05% of the consolidated loss, with negative net assets of 3.67 crore as at 31 March 2024.
  4. Supplier-finance liabilities sit in borrowings, and bank stock/debt statements go unreconciled Major - Supplier-finance (reverse factoring) arrangements in FY2025-26 carried repayment periods of 60-120 days and extended payment terms up to 120 days versus the standard 45, and were classified as borrowings due to the "significant extension of credit terms". Quarterly stock statements and trade receivables/payables submitted to banks for working capital loans were "in some of these cases not reconciled with books" in FY2025-26, FY2024-25, and FY2023-24. CRISIL downgraded PPAP's long-term bank facilities to CRISIL A-/Stable from CRISIL A/Negative in FY2024-25.
  5. Promoter directors have repeatedly needed shareholder waivers for excess pay in loss years Major - Mr. Ajay Kumar Jain and Mr. Abhishek Jain each received excess managerial remuneration of ₹76,48,021 in FY2021-22, waived by shareholders at the AGM of 16 September 2022 with 99.94% votes in favour. Mr. Ajay Kumar Jain received ₹64.97 lakhs in excess in FY2022-23, held in trust pending a waiver passed with 99.98% votes on 18 September 2023. The Promoter and Promoter Group voted 100% in favour on all resolutions at the AGM of 25 September 2025.
  6. Related-party dealings run through loans and guarantees to the wholly owned subsidiary Major - PPAP granted unsecured loans to its wholly owned subsidiary in FY2026, repayable on demand, though no repayment was demanded during the year; in FY2023 and FY2022, loans carried no repayment schedule for principal or interest. The maximum exposure if the financial guarantee to the subsidiary is called on was ₹1.67 crore as at 31 March 2026, down from ₹3.12 crore a year earlier. The FY2026 consolidated statements admit "significant related party transactions" with promoters, directors, or KMP that "potential conflict with the interests of the Company at large".
  7. Unqualified opinions every year, but a going-concern flag on one subsidiary every year Major - The statutory auditors issued unqualified opinions on the standalone statements every year from FY2020 through FY2026. The consolidated reports for FY2024, FY2025, and FY2026 each carry an Emphasis of Matter, a special call-out in the audit report, on one subsidiary with eroded net worth, cash losses, and current liabilities exceeding current assets, relying on the Holding Company's support. The FY2025 standalone report also notes the audit trail in the accounting software operated only from 29 August 2024 onwards.
  8. Minor NSE fine and small JV-level GST matter disclosed Clean - The NSE issued a notice dated 14 December 2022 to PPAP for non-compliance of Regulation 42(3), imposing a ₹10,000 fine, for which the Company applied for a waiver. A JV-level GST demand of ₹9.37 lakhs was deposited on 28 March 2025 after the appeal was rejected on 25 October 2024, with a ₹4.02 lakh interest/penalty waiver to be claimed under the Amnesty Scheme; the Group's share is ₹2.01 lakhs. The FY2025-26 Corporate Governance report states no penalties or strictures were imposed by stock exchanges, SEBI, or any statutory authority on matters related to capital markets in the last three years.

What to watch

Bottom line: This is an audited, unqualified record whose reported profit has nonetheless detached from operations, other income and a one-off JV gain, not the core business, produced FY26 earnings. The structural risk sits in the subsidiary stack, where one unit has needed the parent's support for three years running, and in the supplier-finance and bank-reconciliation gaps that blur the true debt picture. Watch the merger and slump-sale completions, the CGST appeals, and the next rating action.