PSP Projects’ record shows seven years of unqualified audit opinions, but the FY26 numbers tell a different story: one customer group now dominates the order book, operating cash flow has lagged profit for a decade, and the company has become structurally tied to that same group through proposed related-party limits of ₹5,417 crore, 1.72 times its own turnover, while simultaneously classifying those transactions as not material.
Key findings
- A single customer group is now one-third of revenue and two-thirds of the backlog
Major- Revenue from one customer group rose to ₹1,047 crore, or 33% of consolidated revenue, in FY26 from 12% a year earlier. That group now represents 67% of the ₹13,447 crore order backlog, and receivables from it reached ₹334 crore at March 2026. A ₹29 crore provision was taken against the Kashi Vishwanath Temple project because the unbilled receivable had been outstanding beyond one year, driving the total expected credit loss provision on unbilled revenue from ₹3.6 crore to ₹30.5 crore. - The business is becoming structurally dependent on Adani Group entities
Major- The company seeks shareholder approval for FY27 related-party transactions with eight Adani Group entities totalling ₹5,417 crore, equivalent to 172% of FY26 consolidated turnover. One counterparty, Ahmedabad International Airport, reported a negative net worth of ₹(1,649) crore, yet the proposed limit is ₹1,134 crore. The Board Report states no material related-party transactions under Section 188, while simultaneously seeking shareholder approval for these same transactions under SEBI Listing Regulations. - Operating cash flow has persistently lagged reported profit
Major- Cumulative cash from operations of ₹515 crore over ten years covered only 0.69 times cumulative profit after tax less other income. Return on capital employed fell from 22.7% in FY23 to 7.5% in FY26, and the Board recommended no dividend for FY26, retaining earnings for expansion. Short-term borrowings constituted 89% of total borrowings at March 2026. - Disputed tax demands have accumulated with no provisions recognised
Minor- Disputed tax demands across income tax, sales tax, service tax, GST, and entry tax remained unchanged in their individual amounts between FY25 and FY26, while total tax matters in dispute fell from ₹89,635.68 lakhs to ₹73,539.19 lakhs. The company has recognised no provision against any of them, stating it expects judgement in its favour. A client invoked bank guarantees of ₹32.6 crore on the PAC Mahila Battalion project in FY25; the performance guarantee portion was expensed and a provision of ₹1.87 crore was made against the retention receivable. - Unqualified audit opinions across all seven years, with Key Audit Matters reported annually
Minor- The statutory auditors issued unqualified opinions on standalone and consolidated financial statements for every year from FY20 through FY26. Contrary to the original finding, Key Audit Matters-specifically Revenue Recognition and Trade Receivables-were reported in the standalone auditor's reports for FY23, FY24, FY25, and FY26. The company has no dedicated internal audit department, relying instead on an external internal auditor with assistance from process owners. - One joint statutory auditor resigned mid-term in October 2025
Minor- M/s. Prakash B. Sheth & Co. resigned effective 17 October 2025, citing that the company’s expected growth exceeded their resources. The replacement, M/s. G. K. Choksi & Co., was appointed with a proposed fee of ₹15 lakhs for the remaining two quarters, compared to ₹8.25 lakhs paid to the outgoing auditor for the same period in FY25. The other joint auditor, M/s. Kantilal Patel & Co., has been in place since at least FY20 and provides continuity. - A prior impairment on a subsidiary investment was reversed in FY26
Clean- Management reassessed the recoverable amount of its investment in PSP Projects & Proactive Constructions based on revised business projections and increased order inflows, concluded the recoverable amount exceeded the carrying amount, and determined that a reversal of impairment is required. The original provision of ₹3.66 crore was recognised in FY21.
What to watch
- Adani RPT shareholder vote. Shareholder vote on eight Adani Group material RPT resolutions for FY27 at the AGM scheduled 27 June 2026.
- Kashi project provision. Realisation or further provisioning of the ₹29 crore Kashi Vishwanath Temple unbilled revenue against which a full expected credit loss provision was recorded in FY26.
- Supplier-financing arrangement. Whether the ₹184.6 crore supplier-financing arrangement continues or expands, given it was first disclosed in FY26 with a nil prior-year balance (D1 period ended 31 Mar 2026).
- Debt-free target. Whether the company achieves its stated expectation of becoming debt-free within the next two to four quarters, as communicated in the Q4 FY26 earnings call.
Bottom line: This is a company whose financial statements carry clean audit opinions, but whose economic reality has been reshaped by a single relationship. The Adani Group now supplies a third of revenue, two-thirds of the backlog, and proposed RPT limits that exceed the company’s own turnover, while the Board simultaneously denies materiality under company law. Cash conversion has been weak for a decade, returns have halved, and new supplier-financing borrowings sit alongside promoter-guaranteed consortium debt and lien-pledged deposits that the stated net-debt figure excludes. Watch the RPT vote, the ageing government receivables, and whether the debt-free target materialises or recedes.