R R Kabel Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

R R Kabel's record shows clean audit opinions and a 28% revenue surge, but two structural concerns sit beneath the surface: trade payables routed through interest-bearing usance letters of credit have tripled to ₹1,107 crore while the company seeks a fourfold borrowing-limit increase, and the loss-making FMEG segment has reported negative PBIT margins for four consecutive years.

Key findings

  1. Usance LC payables tripled to ₹1,107 crore as the company seeks a ₹3,000 crore borrowing limit Major - Trade payables include acceptances settled through usance letters of credit of ₹1,107.27 crore in FY26, up from ₹374.04 crore in FY25, all secured by a first pari-passu charge on current assets. The board is seeking shareholder approval to raise the borrowing limit from ₹750 crore to ₹3,000 crore and the charge-creation limit from ₹750 crore to ₹6,000 crore, passed on 15 July 2026 with 99.68% votes in favour. Total reported borrowings stood at ₹337 crore against the proposed new borrowing headroom of ₹3,000 crore.
  2. Operating cash conversion is weak, dividends far outstrip free cash flow, and a large capex programme is ramping up Minor - Cumulative CFO of ₹1,825 crore covered only 65% of cumulative EBITDA of ₹2,792 crore over the seven years to FY26. Free cash flow collapsed from ₹152 crore in FY24 to ₹7 crore in FY26, while total dividends for FY26 amount to ₹107.45 crore, or 15.3 times free cash flow. The company plans a modular capex programme of ₹1,200 crore over three years from FY26 to FY28, with approximately ₹300 crore invested in FY26 and higher outflow expected in FY27.
  3. Promoter family consolidated control through a generational transition with sharply higher pay and rising institutional dissent Minor - Shri Tribhuvanprasad Kabra and Shri Shreegopal Kabra resigned effective 31 May 2025, and Shri Mahendrakumar Kabra was elevated to Managing Director, while two next-generation family members were appointed as Whole-time Directors and later re-designated as Joint Managing Directors. Total remuneration for the three promoter Executive Directors in FY26 was ₹36.18 crore. At the 15 July 2026 AGM, the resolution to revise remuneration for Managing Director Shri Mahendrakumar Kabra drew 33.71% votes against from Public Institutions, while resolutions to revise remuneration and re-designate the two Joint Managing Directors drew 58.75% and 58.76% votes against from Public Institutions.
  4. Audit opinions are clean, but the accounting software lacks complete audit-trail logging across three years Minor - For FY26, the audit trail was not enabled at the database level to log direct data changes and was not enabled at the application level for certain fields pertaining to revenue, purchase and other processes. Edit logs for changes to the audit trail features were unavailable at the application level until 24 November 2025, so the auditor could not determine whether any changes were made before that date. Similar gaps were flagged in FY25 and FY24, with partial remediation only in the current year.
  5. Statutory auditor changed to B S R & Co. LLP for FY26 with no stated reason Minor - Audit reports for FY26 are signed by B S R & Co. LLP, while the FY25 auditor was an unnamed firm, and no reason for the change is stated in the available filings. B S R & Co. LLP was already named in the FY24 Board's Report for appointment for a second term through the 34th AGM in 2028. Total fees paid to Deloitte Haskins & Sells LLP and network entities for all services in FY26 were ₹1.08 crore.
  6. Revenue surged 28% in FY26 driven by Wires & Cables, while FMEG losses narrowed but the segment stayed unprofitable Clean - Consolidated revenue rose from ₹7,618 crore in FY25 to ₹9,722 crore in FY26, with the Wires and Cables segment surging 31% to ₹8,764 crore. FMEG revenue grew modestly from ₹930 crore to ₹959 crore, while its PBIT margin remained negative at -3.45%. Trade receivables stood at ₹998 crore with receivables days of 37.47, stable against 39.44 days in FY25.

What to watch

Bottom line: This is a disclosed and audited record with genuine revenue momentum and stable receivables. The risk sits in two places: the structural reliance on usance LC financing that keeps debt off the balance sheet while the company seeks vastly expanded borrowing headroom, and an FMEG unit that remains unprofitable with a negative PBIT margin of -3.45% in FY26. Watch the borrowing-limit utilisation and the FMEG impairment test for FY27.