Uday Jewellery Industries has reported seven consecutive years of clean audit opinions, and its auditors have repeatedly confirmed that no fraud was noticed during their audits. The record, however, carries a persistent earnings-quality problem: operating cash flow has failed to cover reported profit in most years, and the company is simultaneously expanding its borrowing limits and related-party transactions with a promoter-group entity.
Key findings
- Operating cash flow has persistently failed to cover reported profit
Major- Over nine years, cumulative operating cash flow was ₹-144 crore against cumulative profit of ₹89 crore, a ratio of -1.75x. FY26 alone produced ₹-107 crore of operating cash flow against ₹35.77 crore of profit, a -2.99x ratio. The Board meeting held on 28-05-2026 was scheduled to consider declaring a final dividend for the year ended March 31, 2026. - Revenue grew 66% while receivables grew 45% and the impairment threshold was loosened
Major- Revenue rose to ₹287 crore in FY25 from ₹173 crore in FY24, while trade receivables rose to ₹69.44 crore from ₹47.84 crore over the same period. The credit-impairment policy was loosened: receivables were "generally considered credit impaired after 120 days past due" in FY23, but the FY25 policy considers them impaired "after 365 days past due". Receivable days rose to 88.25 in FY25 from 101 in FY24. - Shareholder-approved related-party limits with Sanghi Jewellers have tripled
Major- The approved limit for transactions with Sanghi Jewellers Private Limited (SJPL) rose from ₹50 crore for 01.10.2022 to 30.09.2023 to ₹150 crore for 01.10.2025 to 30.09.2026. The company also availed an unsecured inter-corporate deposit of ₹9 crore from SJPL, outstanding at the FY2025-26 balance sheet date. The Board meeting on 28-05-2026 was scheduled to consider leasing all fixed assets of SJPL. - The company is seeking approval to borrow and charge assets up to ₹250 crore
Major- The Board proposed special resolutions under Section 180(1)(c) and 180(1)(a) to borrow up to ₹250 crore and create charges on assets up to that limit. A further resolution under Section 186 would allow investments, loans, guarantees and securities up to ₹250 crore outstanding at any time. Reported secured debt stood at ₹27.28 crore as of 31 March 2022. - The Sanghi family has consolidated control through appointments and allotments
Major- Mr. Tejas Sanghi, son of the promoter couple, was appointed Business Development Head effective 13 August 2026 at up to ₹54,00,000 per annum, and his spouse Mrs. Sakshi Sanghi was appointed Associate Business Developer at up to ₹42,00,000 per annum. Independent directors have resigned repeatedly, including Mr. Ramprasad Vempati and Mr. Vikram Goel on 31.08.2024, with Mr. Bala Subramanyam Danturti's resignation to be accepted at the Board meeting on 28-05-2026. Preferential allotments were made to promoter-group members, including 4,71,725 shares to Sakshi Sanghi on 01.05.2026. - FY2025-26 results are restated for the NCLT-sanctioned amalgamation of Narbada Gems
Major- The NCLT Hyderabad Bench sanctioned the amalgamation of Narbada Gems and Jewellery Limited by order dated 21 January 2026, with an appointed date of 1 April 2024 and effective date of 19 February 2026. Comparative FY2025 financials were restated to give effect to the Scheme. A total of 97,81,025 equity shares were allotted to erstwhile Narbada shareholders on 5 March 2026. - A single disputed income tax demand has persisted across seven annual reports
Minor- The company has contested income tax assessment orders for AY 2017-18 and deposited ₹1.30 crore under protest, disclosed consistently from the FY2019-20 annual report through the FY2024-25 annual report. The FY2022-23 AGM notice disclosed disputed dues of ₹2,99,18,329 pending before CIT (A), Hyderabad-5. The FY2025-26 auditor's report stated no disputed dues of Income Tax were outstanding. - Seven years of clean audit opinions with one recurring software exception
Minor- The Independent Auditor's Report for each year from FY2020 through FY2026 is unqualified. The sole recurring exception is that the accounting software "Wings" "does not have the feature of recording audit trail (edit log) facility," flagged in both the Section 143(3) report and the internal-financial-controls opinion for FY2024 and FY2025. CARO clause 3(xi)(a) for FY2025 through FY2020 states no material fraud was noticed or reported during the audit.
What to watch
- 27th AGM on 28-09-2026. Shareholders vote on the ₹250 crore borrowing and asset-charge resolutions, the Section 186 investment/loan/guarantee limit of ₹250 crore, and the appointments of Mr. Tejas Sanghi and Mrs. Sakshi Sanghi.
- Board meeting on 28-05-2026. The agenda includes the final dividend declaration for FY ended March 31, 2026, the lease of all fixed assets of Sanghi Jewellers Private Limited, and noting of the BSE Order on Non-Compliance of SEBI (LODR) Regulations, 2015.
- AY 2017-18 income tax dispute. Resolution is pending before CIT (A), Hyderabad-5, as disclosed in the FY2022-23 AGM notice.
- NCLT order filing. The certified copy must be filed with the Registrar of Companies by both companies to make the Scheme effective, as disclosed in the 21 January 2026 announcement.
- FY2025-26 Annual Report. The ageing schedule and impairment disclosures for the period ending March 31, 2026 are to be filed.
Bottom line: This is an audited record with clean opinions, but the cash-flow shortfall against reported profit is the central issue, it has persisted for nine years while dividends continue. The related-party limits with Sanghi Jewellers have tripled, the company is seeking borrowing authority far above its reported debt, and the amalgamation restatement recasts the comparatives. The AGM on 28-09-2026 is the moment to watch, as it will test whether shareholders approve the expanded limits and appointments.