Spandana Sphoorty's FY25 and FY26 results are dominated by a collapsing loan book and massive technical write-offs, which drove a ₹1,274 crore loss and forced the company to rely on lender waivers and promoter support to continue as a going concern. The record also shows a pattern of control failures, including a fivefold escalation in employee cash misappropriation, and a long-standing unpaid regulatory refund. The core business is shrinking, and the financials are propped up by assumptions that need close scrutiny.
Key findings
- A collapsing loan book and ₹1,555 crore of technical write-offs drove a ₹1,274 crore FY25 loss, with another ₹1,155 crore written off in just nine months of FY26
Critical- Spandana recognized technical write-offs of ₹1,555.39 crore for FY2025, citing microfinance industry challenges including JLG model weakening and borrower discipline deterioration. The loan book reduced from ₹10,566.91 crore at March 31, 2024 to ₹5,554.45 crore at March 31, 2025, and further to ₹3,449.58 crore by March 31, 2026. Technical write-offs during April 1, 2025 to December 31, 2025 aggregated to ₹1,155.27 crore, selected as loss assets per Ind AS 109 credit loss policy. - Going concern is propped up by waivers from only a majority of lenders, a ₹640.63 crore deferred tax asset, and promoter support expectations while ₹2,836 crore of repayments fall due in FY27
Critical- The company was not compliant with certain financial covenants as at March 31, 2026, and obtained waivers from only a majority of lenders. Total borrowings were ₹3,824.25 crore as of March 31, 2026, against scheduled repayments of ₹2,835.66 crore during FY2026-27. Management's going concern conclusion relied on an RBI waiver, lender waivers, and expected promoter support, while a ₹640.63 crore deferred tax asset depends on future profits. - Employee cash misappropriation escalated fivefold to ₹41.79 crore in FY25 and remained at ₹21.58 crore in FY26, while the FY25 internal controls opinion was qualified
Major- CARO reported branch employee misappropriation of ₹21.58 crores in FY2025-26 and ₹41.79 crores in FY2024-25, up from ₹10.79 crores in FY2023-24. The FY2024-25 internal financial controls opinion was qualified, citing failed segregation-of-duty controls for IT change deployment and failed end-of-day processing controls at branches, resulting in material adjustments from increased fraud and cash embezzlement. - A ₹23 crore RBI-directed customer refund remains unpaid after five years, layered on a record of RBI penalties, SEBI settlements, and exchange fines
Major- RBI inspection observations required refund of excess interest collected on loans disbursed October 2017 to February 2020; during FY2026 the company refunded ₹0.04 crore, leaving ₹23.10 crore unrefunded as borrower details were untraceable. RBI imposed a ₹2.33 crore penalty in August 2022 for non-adherence to pricing guidelines. SEBI disposed of adjudication proceedings via a settlement order dated August 21, 2024, after the company paid ₹38,12,160 for alleged non-disclosure of covenant breaches. - Criss Financial has absorbed ₹200 crore of equity infusions and carries a ₹75.15 crore guarantee, while its goodwill has never been impaired despite losses driving net worth below carrying cost
Major- Spandana invested ₹100 crore in Criss Financial Limited in each of FY2024-25 and FY2023-24. A corporate guarantee of ₹75.15 crores was outstanding for Criss Financial's term loans as at March 31, 2025. No impairment loss was recognized on the goodwill from the December 27, 2018 acquisition in any year through FY2025-26, despite losses reducing net worth below carrying cost. - The founder exited via a ₹40.71 crore settlement and two MD & CEOs departed in three years, while the entire C-suite turned over in FY26 and ESOP costs reversed by ₹18.91 crore
Major- The founder and erstwhile MD resigned on November 2, 2021, and received a total payment of ₹40.71 crore in June 2022. Mr. Shalabh Saxena was appointed MD & CEO in March 2022 and resigned effective April 23, 2025; his successor, Mr. Venkatesh Krishnan, was appointed effective November 27, 2025. In FY2025-26, the Chief Compliance Officer, Chief Risk Officer, Chief Information Officer, and Chief Operating Officer all resigned and were replaced, and share-based payment cost for 10,28,127 options was reversed by ₹18.91 crore. - Contingent tax and GST demands escalated to ₹75.95 crore by FY24, with the FY2016-17 income tax demand swinging between ₹47.76 crore and ₹70.26 crore across years
Minor- The FY2016-17 income tax demand was disclosed at ₹70.26 crore as at March 31, 2022, fell to ₹47.76 crore as at March 31, 2023, and rose to ₹51.92 crore as at March 31, 2024, with ₹6.92 crore deposited against the demand in each year. Total contingent liabilities increased from ₹55.40 crore to ₹75.95 crore between March 31, 2023 and March 31, 2024. Management stated no further provision was required based on internal assessment and legal opinion. - The two-subsidiary group is being collapsed into one entity, with loss-making Caspian slated for winding-up and profitable Criss being merged into the parent without consideration
Minor- Caspian Financial Services Limited remained "yet to commence commercial operations" from FY2021 through FY2023, before management concluded in FY2025 that the business would be wound up "as soon as possible". On August 14, 2026, the Board approved the amalgamation of Criss Financial Limited with Spandana, with no consideration passing as all CFL shares would be cancelled. For FY2026, Criss reported revenue of ₹150.86 crore and net worth of ₹233.11 crore, against Spandana's revenue of ₹906.59 crore and net worth of ₹2,193.75 crore.
What to watch
- FY27 debt repayments. Scheduled repayments of ₹2,835.66 crore fall due in FY2026-27 against total borrowings of ₹3,824.25 crore as of March 31, 2026.
- Criss amalgamation completion. The merger is subject to statutory, regulatory, shareholder and creditor approvals as disclosed on August 14, 2026.
- RBI refund directive. The remaining ₹23.10 crore of excess interest is pending refund, with RBI advice sought as of the FY2025-26 reporting period.
- Misappropriation investigation. The outcome of investigations into the ₹21.58 crores branch employee misappropriation reported in FY2025-26 is pending.
Bottom line: This is a record of a lender in distress, where the loan book has halved and the losses are real and disclosed. The risk is concentrated in the assumptions underpinning the going-concern view: lender waivers, promoter support, and a deferred tax asset that needs future profits to be realized. Watch the FY27 repayment schedule and the outcome of the next audit's going-concern assessment.