Sakthi Sugars' audit history is the story of one large related-party receivable: a ₹252.2 crore interest amount from an erstwhile associate drove six consecutive qualified opinions, and the FY2026 audit only went clean after the company assigned that receivable away in full settlement. The record also shows years of loan defaults, heavy promoter-group guarantees, and profits that repeatedly leaned on one-off gains.
Key findings
- A ₹252.2 crore receivable drove six qualified opinions until it was assigned away
Critical- The statutory auditor qualified the standalone financial statements every year from FY2019-20 through FY2024-25, solely or primarily for not providing impairment on interest receivable of ₹252.2 crore from an erstwhile associate as required by Ind AS 109. The FY2024-25 qualification called the matter "repetitive since 31.03.2020". Sakthi Sugars assigned the receivable to a third-party debt management company in full settlement during FY2025-26, and the FY2026 audit, dated May 25, 2026, went clean. - The company repeatedly pledged its assets and guarantees for promoter-group loans
Major- As at March 31, 2025, loans repayable on demand to related parties were ₹252.64 crore, 99.31% of all loans granted. Members approved security and a corporate guarantee for ₹340 crore of Sakthi Auto Component Limited loans and ₹90 crore of ABT Limited loans. During FY2023-24, the company gave a guarantee and pledged SACL shares for a ₹100 crore ABT Transport loan. An interest receivable of ₹252.2 crore from an entity was overdue for over 90 days as at March 31, 2025, and remained outstanding. - Loan defaults reported in multiple years; pledged shares invoked and transferred
Major- The company defaulted on loan repayments or interest during FY2025-26, FY2024-25, FY2023-24, and FY2022-23, as reported under CARO. As at FY2020-21, defaults to SDF, banks and asset reconstruction companies totalled ₹502.53 crore of principal and ₹673.41 crore of interest since February 2012. ARCIL invoked a pledge of 6,38,59,394 SACL shares on March 8, 2021, and the shares were transferred to ARCIL on March 10, 2021. - Reported profits repeatedly depend on one-off accounting gains
Major- Exceptional items in FY2021-22 included ₹55.97 crore interest remission by Punjab National Bank and ₹12.94 crore by Axis Bank. ARCIL revoked a ₹101.74 crore remission granted in FY2016-17, and Edelweiss ARC revoked a ₹22.49 crore remission before granting a new package. The company booked ₹56.25 crore profit on the slump sale of its Dhenkanal units and ₹14.43 crore on the Soya division sale. Deferred tax assets were created only to the extent of deferred tax liability, given no reasonable certainty of future taxable income. - A one-time ₹82.11 crore tariff uplift sits in FY2025-26 revenue
Major- The company recognised ₹44.11 crore of differential tariff income and ₹38 crore of carrying cost, aggregating ₹82.11 crore, based on an APTEL judgment dated December 22, 2025. The auditor noted the matter was remanded to TNERC for consequential orders, actual recoverability is subject to determination, and any difference will be adjusted as a change in accounting estimate. No single external customer amounted to 10% or more of revenue in FY2024-25, FY2022-23, or FY2020-21. - Operating cash flow has collapsed while debt and finance costs stay heavy
Major- Operating cash flow fell from ₹165 crore in FY17 to negative ₹43.36 crore in FY18, while PAT swung from a ₹30.35 crore profit to a ₹177 crore loss. Interest coverage stood at -0.68x in FY18 against borrowings of ₹570 crore and cash of ₹15.92 crore. Finance costs were ₹234.15 crore in FY22 against a net loss of ₹150.16 crore. CARO confirms short-term funds were prima facie not used for long-term purposes during FY26. - Three brothers run the company without remuneration; promoter pledging is high
Major- Dr. M. Manickam (Chairman & MD), Sri M. Balasubramaniam (MD) and Sri M. Srinivaasan (Joint MD) are brothers serving without remuneration since 2021 and 2023. Promoter pledge stood at 62.24% of promoter holding as of the latest FY, down from 86.81% a year earlier. ABT Investments transferred 1,68,60,000 shares to the Chairman on 4 May 2026, cutting its holding from 55.93% to 41.75% and ending its status as holding company.
What to watch
- TNERC order on tariff. The ₹82.11 crore APTEL-based income is subject to TNERC determination, pending as of the FY2025-26 audit report dated 25 May 2026.
- SDF loan settlement. The One Time Settlement application for the Sivaganga unit SDF loan was under consideration as at 31.03.2026.
- Assigned receivable recovery. Recovery or write-off of the assigned ₹252.2 crore SACL interest receivable from the third-party debt management company, as disclosed in the FY2025-26 Annual Report.
- Guarantee invocation. Any invocation of corporate guarantees for SACL's ₹340 crore and ABT Limited's ₹90 crore facilities, as disclosed in the FY2024-25 Annual Report.
Bottom line: This is a record that carried a single material flaw for six years, an unprovided ₹252.2 crore related-party receivable, and the flaw was resolved by assigning the receivable away, not by collecting it. The clean FY2026 opinion is real, but it sits alongside loan defaults reported in FY2022-23 through FY2025-26 and defaults to SDF, banks and asset reconstruction companies totalling ₹502.53 crore principal and ₹673.41 crore interest since February 2012 as at FY2020-21, heavy promoter-group guarantees, and profits that have repeatedly depended on one-off gains. Watch the TNERC order, the SDF settlement, and whether the assigned receivable ever converts to cash.