Swan Defence and Heavy Industries Ltd Forensic Report - SOIC x StockScans Report

as of Aug 2026

Swan Defence and Heavy Industries is a company emerging from insolvency whose record is defined by its resolution-plan architecture: a single promoter family holds 89.9% of equity, all assets are encumbered in favour of lenders, and operations are funded by interest-free loans from the promoter holding company. The clean audit opinions of the last two years sit atop a history of disclaimer and qualified opinions, and the company remains under active investigation by the CBI, ED and SFIO.

Key findings

  1. Promoter loans fund operations while shareholder nod is sought for material related-party borrowings Major - Swan Defence took an interest-free unsecured loan of ₹610.96 crore from Hazel Infra Limited during FY2025-26, following ₹805.95 crore in FY2024-25. It now seeks shareholder approval to borrow up to ₹3,000 crore from Hazel Infra, an amount that is over ten times Hazel Infra’s own consolidated turnover of 282.14 crore, and up to ₹4,500 crore from Swan Corp Limited, representing 105% of Swan Corp’s turnover. A refundable deposit of ₹73.7 crore with E Complex Private Limited, an erstwhile subsidiary admitted under CIRP, is carried at a discounted present value of ₹60.6 crore after the company’s claim was not accepted by the Resolution Professional.
  2. Regulatory action has been continuous for over five years, with active CBI, ED and SFIO investigations Major - NCLT Ahmedabad initiated CIRP against the company on 15 January 2020, and the resolution plan was approved on 23 December 2022. Stock exchanges levied fines of ₹2.36 crore during FY2024-25 for non-compliances of SEBI Listing Regulations, and the company delayed quarterly results for seven consecutive quarters. As of 6 August 2026, the Registrar of Companies submitted that wide-ranging investigations are actively underway by the CBI, ED and SFIO, and the company’s compounding application was held prima facie non-maintainable due to the pending SFIO probe.
  3. Clean audit opinions sit atop a history of disclaimer and qualified opinions, with a ₹1,684 crore disputed receivable never provided for Major - The consolidated audit opinion for FY2021-22 was a disclaimer of opinion, and the standalone opinion for FY2022-23 was qualified because the new management could not assure the accuracy of opening balances. The standalone and consolidated opinions for FY2024-25 and FY2025-26 are unqualified, but three wholly-owned subsidiaries under CIRP or liquidation are excluded from consolidation. CARO clause (xvii) reports cash losses of ₹293.35 crore in FY2025-26.
  4. The resolution-plan exit remains entangled in unresolved litigation over ECPL, disputed tax demands, and large legacy bonds Major - ECPL was admitted to CIRP in December 2020; the NCLT order completing CIRP on 4 December 2023 was set aside by NCLAT on 25 July 2024, and the Committee of Creditors’ appeal is pending final hearing before the Supreme Court. The company has given a refundable security deposit of ₹73.7 crore to ECPL, represented at a present value of ₹54.59 crore, and the company’s claim was not accepted by ECPL’s Resolution Professional. Bonds and undertakings issued total ₹266.5 crore, and contingent liabilities of 10 crore relating to pre-CIRP and CIRP period matters remain unchanged from the previous year.
  5. Reported borrowings understate economic obligations: ₹162.4 crore of NCDs remain on the books despite being declared void Major - Swan Defence carried ₹162.4 crore of Non-Convertible Debentures on its balance sheet in FY2023-24 while simultaneously stating the contract “does not survive and stands cancelled, void ab-initio and infructuous”. Under the approved resolution plan, the company must not redeem any Preference Shares issued to TOPL/SCL shareholders until all outstanding amounts to its lenders are paid in full. All immovable and movable properties carry a first pari-passu charge, and all current assets carry a second pari-passu charge in favour of lenders, with operational cash flows routed through a designated Trust and Retention Account.
  6. Revenue collapsed to near-zero for two years before a sharp FY26 ramp, while ₹1,732 crore of legacy receivables were written off Major - Revenue from operations fell to nil in FY24 and ₹7.03 crore in FY25, before rising to ₹282 crore in FY26. During FY23, the company wrote off shipbuilding contract receivables of ₹1,732.19 crore and trade receivables of ₹795.08 crore, both created out of provisions made in earlier years. As of FY24, ₹1,588.46 crore was included in Work in Progress relating to cancelled orders for NOPV, CGTS and FPV, pending outcome of representation to customers or legal action.
  7. Three wholly-owned subsidiaries excluded from consolidation Major - Three wholly-owned subsidiaries - E Complex Private Limited, PDOC Pte. Limited, and Reliance Technologies and Systems Private Limited - are not considered in the consolidation of the financial statements because the company could not obtain their financial data. The consolidated financial statements incorporate only one associate, Conceptia Software Technologies Private Limited. The Board approved a Scheme of Arrangement and Amalgamation on 22 November 2024 between Triumph Offshore Private Limited and SDHI, with shareholder approval obtained on 25 May 2026 and the NCLT petition filed on 27 March 2026.
  8. A single promoter family controls the board, holds 89.9% of equity, and four family members are directors Major - Hazel Infra Limited held 94.91% of share capital until it sold 26,38,747 shares via an Offer for Sale on 18-19 March 2026, reducing its holding to 89.90%. The Board as of 31 March 2026 comprised Nikhil Vasantlal Merchant (Chairman & MD), his brother Paresh, his son Bhavik, his nephew Vivek, one Whole-Time Director, and five Independent Directors. Mr. Ashishkumar Bairagra, Independent Director, resigned effective 20 February 2026 and was replaced by Mr. Jayaramakrishnan Kannan, who also serves as a director of Swan Corp Limited, the promoter group entity.

What to watch

Bottom line: This is a resolution-plan company whose clean audit opinions and FY26 revenue ramp are the visible surface of a record still shaped by its insolvency past. The economic reality is one of full asset encumbrance, promoter-funded operations, and a subsidiary structure hollowed out by CIRP and liquidation. The risk is that the company’s revival depends on related-party funding approvals, the outcome of active criminal investigations, and litigation that reaches the Supreme Court, all unfolding simultaneously. Watch the shareholder vote on the ₹3,000 crore and ₹4,500 crore RPT borrowings, the ECPL Supreme Court hearing, and the CBI/ED/SFIO investigations.