Ram Ratna Wires Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

Ram Ratna Wires’ record carries a fundamental reset: the merger of Global Copper Private Limited drove a full restatement of FY2024-25 financials, and the company booked an exceptional employee-benefit charge of ₹3.56 crore while adjusting prior-period tax through reserves. Two other features shape the picture, ₹67.91 crore in disputed tax demands sit unprovided for, and a decade of weak cash conversion has been paired with an expanding capex programme that turned free cash flow deeply negative.

Key findings

  1. A merger drove a full restatement of FY2024-25 financials, alongside an exceptional charge and a prior-period tax adjustment through reserves Critical - The NCLT sanctioned the amalgamation of Global Copper Private Limited on 29 May 2025 with a retrospective appointed date of 1 April 2024, and the company issued revised standalone and consolidated financial statements for FY2024-25 using the pooling-of-interest method. The company recognised an incremental employee-benefit liability of ₹3.56 crore (consolidated) in FY2025-26 due to the revised definition of wages under the new Labour Codes notified on 21 November 2025, disclosed under exceptional items. The statements of changes in equity for FY2025-26 record an adjustment for finalisation of the company’s share of expenses towards the IPO of R R Kabel Limited in FY2022-23, together with an adjustment for short provision of tax in an earlier year.
  2. Income tax demands from a November 2023 search have escalated to ₹67.91 crore, with no provision made and the auditor flagging the matter Major - The Income Tax Department raised a total tax demand of ₹67.91 crore (excluding interest of ₹31.49 crore) for Assessment Years 2021-22 to 2024-25, pursuant to a search and seizure action conducted in November 2023, with appeals pending before the Commissioner of Income Tax (Appeals) as of the FY2025-26 annual report. The statutory auditor included an Emphasis of Matter paragraph in the standalone audit report for FY2025-26 stating that management has made no adjustments in respect of the ₹67.91 crore tax demand and the pending reassessment proceedings. On 9 March 2026, the company received Assessment Orders under Section 147 for AY 2021-22 and AY 2022-23 with an aggregate demand of ₹70.96 crore (including interest of ₹24.51 crore), and on 13 March 2026 received an Assessment Order under Section 143(3) for AY 2024-25 with a demand of ₹10.22 crore (including interest of ₹1.94 crore).
  3. Operating cash flow has been structurally weak relative to reported profits, while an aggressive capex programme strained free cash flow and led to short-term borrowings being used for long-term purposes Major - Cumulative CFO of ₹542 crore covered only 51% of cumulative EBITDA of ₹1,065 crore over the ten years to FY2026. In FY2026, operating cash flow was negative ₹92.99 crore against a PAT of ₹109 crore, while the company paid a dividend of ₹12 crore. Free cash flow was negative for two consecutive years: ₹-10.27 crore in FY2025 and ₹-264 crore in FY2026. The auditor reported in the CARO for FY2025 that funds raised on a short-term basis of ₹54.81 crore had been utilised for long-term purposes. The Bhiwadi manufacturing facility investment was enhanced from an initial ₹200 crore to ₹700 crore over three years, as approved by the Board on 2 August 2024.
  4. The company routinely extends unsecured loans to its joint venture and subsidiaries, reschedules repayments, and merged a promoter-linked entity after three years of shareholder-approved material RPTs Major - The company extended an unsecured loan of ₹3.50 crore to Epavo Electricals Private Limited (joint venture) during FY2025-26. Unsecured loans of ₹10 crore to Tefabo Product Private Limited (subsidiary) and ₹7.50 crore to Epavo were provided during FY2024-25. The due date of repayment of loans aggregating ₹7.5 crore to Epavo which fell due during FY2024-25 was extended, and loans of ₹2.75 crore due during the year were rescheduled per a 3rd amendment to the loan agreement dated 22 August 2024. Pursuant to the amalgamation, the company issued 25,84,536 fully paid-up equity shares to Mr. Hitesh Vaghela, his family members, and entities in which they are interested on 1 July 2025.
  5. The November 2023 Income Tax search led to a ₹16.11 crore demand and reassessment notices, while SEBI required disclosure of all enforcement actions before approving the merger Major - The Income Tax Department conducted a search and seizure action under Section 132 at Ram Ratna Wires Ltd in November 2023. The Department issued an assessment order under Section 143(3) for AY 2023-2024 raising a demand of ₹16.11 crore, which includes interest of ₹3.3 crore and a demand of ₹6.66 crore on account of erstwhile subsidiary Global Copper Private Limited. The company also received notices for re-assessment under Section 143(2) read with Section 147 for AY 2021-22 and AY 2022-23. On 28 October 2024, SEBI issued an observation letter on the draft scheme of amalgamation requiring the company to disclose all details of ongoing adjudication, recovery proceedings, prosecution, and enforcement actions against the company, its promoters, and directors before NCLT and shareholders.
  6. Usance letters of credit and customer channel financing mask ₹419.81 crore of economic obligations Minor - Trade payables include ₹347.43 crore paid to suppliers through usance letters of credit as at 31 March 2026, up from ₹305.87 crore in FY2025 and ₹178.16 crore in FY2024. Channel financing facilities arranged for customers reduced trade receivables by ₹114.45 crore as at 31 March 2026, up from ₹83.67 crore in FY2025. Limited Recourse Receivable Factoring from a bank reduced trade receivables by a further ₹72.36 crore as at 31 March 2026.
  7. The Kabra family consolidates executive control and remuneration across generations while independent oversight remains procedurally compliant but untested by material dissent Minor - Shri Mahendrakumar Kabra (Managing Director) voluntarily gave up all remuneration from 1 June 2025 for the remainder of his term to 29 May 2029, while his sons Hemant Kabra and Sumeet Kabra were simultaneously appointed as Joint Managing Director and Executive Director respectively at salaries of ₹10,00,000 per month each plus commission of up to 2.5% of net profits. Shri Hitesh Vaghela, erstwhile Managing Director of Global Copper Private Limited, was appointed Whole-Time Director at ₹12,50,000 per month from 23 June 2025, and his spouse Smt. Usha Vaghela was simultaneously appointed Vice President at ₹7,50,000 per month. Commission payable to the Managing Director was ₹2.48 crore in FY2024-25, while commission payable to the executive directors of the Parent rose to ₹5.54 crore in FY2025-26. The only shareholder resolution attracting material public-institution dissent was the re-appointment of Shri Hemant Kabra as Executive Director at the 12 September 2023 AGM, where public institutions voted 73.43% against.
  8. Audit opinions have been unqualified across all years, but a recurring audit-trail gap in sales-order software and a one-time short-term-funds misapplication sit alongside otherwise clean CARO reports Minor - The statutory auditor issued an unqualified opinion on standalone and consolidated financial statements for every year from FY2020 through FY2026. The auditor reported that the audit-trail feature was not enabled for the accounting software used for sales-order booking in FY2024, FY2025, and FY2026. In FY2025, the auditor reported that short-term funds of ₹54.81 crore were utilised for long-term purposes; this was not reported in FY2024 or FY2026. The auditor included an Emphasis of Matter paragraph in FY2024 regarding the search-and-seizure action conducted in November 2023, with the consequent impact on the financial statements not ascertainable.

What to watch

Bottom line: This is a disclosed and audited record built on a foundation that was literally rewritten, the merger restatement resets the baseline every investor must work from. The risk sits in two places: the ₹67.91 crore of unprovided tax demands that the auditor has singled out, and a cash-conversion pattern that has not kept pace with reported profits even as capex commitments have multiplied. Watch the tax appeals and the borrowing-limit vote; they will signal whether the strain eases or tightens.