Shalimar Paints Ltd Forensic Report - SOIC x StockScans Report

as of Aug 2026

Shalimar Paints' record shows a company under sustained financial stress: cash losses in every year of the covered period, accumulated losses of ₹543.73 crore, and a promoter pledge that climbed to 70.5% of shares within days of a new controller taking charge. The auditor has issued clean opinions every year since FY2020-21, but has repeatedly flagged database-level audit-trail gaps and an inability to verify subsidiary loan repayments. The going-concern basis rests on management's plans and holding-company support rather than demonstrated viability.

Key findings

  1. Promoter pledge climbed to 70.5% of shares, up from 57.7% a year earlier Major - Promoter pledge stood at 70.51% as of the latest reporting period, up from 57.68% one year earlier. On 13 March 2024, HIMPL disclosed the creation of an encumbrance on 1,80,45,745 shares (21.56% of total share capital), against a pre-event encumbered holding of Nil. HIMPL became a promoter on 11 March 2024 following its open offer.
  2. Cash losses in every year of the covered period, with accumulated losses of ₹543.73 crore Major - The company incurred cash losses in every year from FY2022-23 through FY2025-26, including ₹43.81 crore in FY2025-26 and ₹64.36 crore in the immediately preceding year. As at 31 March 2026, accumulated losses stood at ₹543.73 crore and current liabilities exceeded current assets by ₹65.48 crore, with financials prepared on a going-concern basis relying on asset monetisation, ECLGS 5.0 credit facilities, and holding-company support.
  3. Related-party loans to subsidiaries carry no repayment schedules, while the board reports no material RPTs Major - The auditor was "unable to comment on regularity of repayments" for unsecured loans to subsidiaries for FY2025-26, as no repayment schedule was stipulated. The same year, the Board's Report states "No material related party transactions" were entered into and Form AOC-2 disclosure is "not applicable". During FY2025-26, the company advanced loans aggregating ₹5.51 crore to wholly owned subsidiary IM Inicio Projects Private Limited, repayable on demand.
  4. Reported borrowings understate true debt, with supplier-finance and factored receivables outside the headline figure Major - Trade receivables subject to factoring where the company retained significant risks and rewards continue to be recognised in entirety, with proceeds recorded as short-term borrowings of ₹17.81 crore as at 31 March 2026. Trade payables under supplier-finance arrangements stood at ₹Nil as at 31 March 2026, down from ₹15.33 crore a year earlier. CARE Ratings downgraded long-term bank facilities to 'CARE BB+; Negative' on 4 June 2025, and reaffirmed that rating on 3 June 2026.
  5. Auditor flagged audit-trail gaps at database level for three straight years, despite clean opinions Major - For FY2025-26, the auditor reported that due to absence of information in the ISAE 3402 Type 2 report on direct changes at database level, it was unable to comment on whether the audit trail was enabled or operated at that level. For FY2023-24, the audit-trail feature was NOT enabled at the database level for accounting software SAP. Walker Chandiok & Co LLP issued unqualified opinions on both standalone and consolidated financials for FY2022-23 through FY2025-26.
  6. Prior-period financials restated repeatedly, with valuation basis shifting from independent valuers to management estimates Major - In FY2022-23, the company restated FY2022 financials under Ind AS 8, including reversal of deferred tax assets of ₹22.25 crore on brought-forward losses. In FY2021-22, the provision for old and damaged stock was self-assessed by management, whereas in earlier years it was assessed by IBBI registered valuers. On 12 Nov 2025, the company reported consolidated results with restated figures for comparative periods.
  7. Operating cash flow persistently negative or minimal, with capex funded through equity raises and promoter-linked financing Major - Operating cash flow was negative in FY2025 at ₹(58.65) crore and FY2023 at ₹(47.93) crore. A preferential allotment of 11,494,252 equity shares at ₹130.50 per share aggregating ₹150.00 crore was made on 11 October 2023 to promoter-group companies, with funds fully utilized for repayment of working capital facilities and a term loan. Interest coverage was -1.9x in the latest period.
  8. Nashik plant fire arbitration awards and insurance claims dominate a decade-long litigation overhang Minor - The company holds ₹22.62 crore received in respect of the Nashik plant fire as "Other current financial liabilities," not recognised as income until the case is finalised. On 5 Jan 2024, the arbitrator awarded ₹22.01 crore under the Reinstatement Policy; insurers are appealing at Delhi High Court, and by order dated 22 Oct 2024 the company released the entire award against security. A separate arbitration claim of ₹12.57 crore under the Loss of Profit Policy is pending before the Arbitral Tribunal.

What to watch

Bottom line: This is a disclosed and audited record, but the disclosures themselves tell a story of a company that cannot generate cash from operations, carries debt that is partly hidden outside the headline borrowings figure, and has a controller whose entire stake is pledged. The clean opinions sit alongside repeated audit-trail gaps and an auditor unable to verify subsidiary loan repayments. Watch whether the going-concern assumption holds, and whether the FY2026-27 audit can finally comment on those loans.