Aastha Spintex review qualified over Rs 39.53 crore cash

Aastha Spintex Limited received a qualified limited-review conclusion for the quarter and half year ended September 30, 2026 because auditors could not physically verify Rs 39.53 crore of cash on hand, equal to 7.82% of total assets. The auditors said the potential effect on profit, total comprehensive income and other equity could not be determined.

Why did Aastha Spintex receive a qualified review conclusion?

Aastha Spintex received a qualified conclusion because management did not physically verify its Rs 39.53 crore cash-on-hand balance at September 30, 2026. S N D K & Associates LLP said that management's explanations about the balance and its subsequent deposit in a bank were not corroborated by a period-end physical verification.

The qualification covered both standalone and consolidated unaudited results for the quarter and six months ended September 30, 2026. The auditors conducted a limited review under Standard on Review Engagements 2410, which is less extensive than an audit conducted under Section 143(10) of the Companies Act, 2013, and therefore did not express an audit opinion.

The auditors did not conclude that the Rs 39.53 crore balance was misstated. They said they could not obtain sufficient information through review procedures about the existence of the cash at September 30, 2026, and could not determine consequential effects, if any, on reported profit, total comprehensive income or other equity.

The September 2026 conclusion differed from the reports on earlier periods disclosed in the filing. Predecessor auditor S N Shah & Associates LLP issued an unmodified conclusion for the quarter ended June 30, 2026 on August 14, 2026, and an unmodified opinion for the year ended March 31, 2026 on July 27, 2026.

What reported balances could the unverified cash affect?

Aastha Spintex's reported cash, profit, total comprehensive income and other equity could require adjustment if the cash balance is found not to exist or is otherwise misstated. The filing does not quantify an adjustment, so it does not establish either a loss or an overstatement in the September 2026 financial results.

Management said the Rs 39.53 crore cash balance mainly related to procurement transactions customarily settled in cash in Aastha Spintex's business. That explanation provides the stated reason for holding the balance, but the auditors said it did not replace physical corroboration of cash at September 30, 2026.

The standalone cash-flow statement reported cash and cash equivalents of Rs 40.98 crore at September 30, 2026, compared with Rs 14.35 crore at September 30, 2025. The increase reflected cash and cash equivalents, current accounts, an escrow account and a share-applicant account, while the qualified matter specifically concerned the Rs 39.53 crore cash-on-hand balance.

Consolidated cash and cash equivalents were Rs 41.16 crore at September 30, 2026. Aastha Spintex did not present prior-period consolidated comparisons because Falcon Yarns Private Limited became its wholly owned subsidiary on August 19, 2026 and the September 2026 consolidated results were prepared for the first time.

What has Aastha Spintex said about cash controls?

Aastha Spintex said management will carry out a physical verification of cash at the end of every quarter and has strengthened controls over cash handling. This is the disclosed response to the process gap identified in the qualified conclusion for September 30, 2026.

The filing does not disclose a cash-custody location, individual procurement transactions or the date and result of any later physical count. It also does not state that a subsequent bank deposit independently resolved the auditors' inability to verify the cash balance at the September 30, 2026 reporting date.

The audit committee and board approved the standalone and consolidated unaudited results on November 7, 2026, the same date as the review reports. Aastha Spintex said the results were prepared under Indian Accounting Standard 34, or Ind AS 34, and Regulation 33 of the Securities and Exchange Board of India listing regulations.

The consolidated review also relied on another auditor's review of Falcon's interim financial information for August 19, 2026 to September 30, 2026. Before consolidation adjustments, Falcon reported Rs 160.94 crore of total assets, Rs 30.86 crore of revenue, Rs 2.80 crore of profit after tax and net cash outflow of Rs 90,000 for that period.

How do the IPO and Falcon acquisition relate to the results?

Aastha Spintex completed an initial public offering, or IPO, of 1.25 crore equity shares at Rs 136 each during the September 2026 quarter, raising Rs 170 crore through an entirely fresh issue. The shares were allotted on July 2, 2026 and listed on NSE Limited and BSE Limited on July 6, 2026.

By September 30, 2026, Aastha Spintex reported using Rs 168.96 crore of gross IPO proceeds of Rs 170 crore, leaving Rs 1.05 crore unutilised. It said there was no deviation from the stated objects and that the monitoring agency report had been reviewed.

The stated use included Rs 111.51 crore for acquiring 100% of Falcon, Rs 10 crore for Falcon's working-capital requirements, Rs 40.44 crore for general corporate purposes and Rs 7.01 crore for issue-related expenses. Separately, Aastha Spintex said the total consideration for acquiring Falcon was Rs 131.51 crore and that Falcon became a wholly owned subsidiary on August 19, 2026.

Aastha Spintex also allotted 4.41 crore fully paid bonus shares on September 29, 2026 in a 1:1 ratio, capitalising Rs 44.14 crore from securities premium. The transaction increased paid-up equity share capital to Rs 88.28 crore, comprising 8.83 crore equity shares with face value of Rs 10 each, and earnings per share for all presented periods were adjusted under Ind AS 33.

Conclusion

The qualified review means Aastha Spintex's September 2026 reported results contain an unresolved audit-review limitation over cash equal to 7.82% of total assets. The auditors did not identify a quantified misstatement, but they could not determine whether adjustments to cash, profit, total comprehensive income or other equity were required.

The next disclosed point to watch is Aastha Spintex's planned physical cash verification at each quarter end after strengthening cash-handling controls. Investors can also track the use of the remaining Rs 1.05 crore of IPO proceeds and disclosures arising from Falcon's first full periods within the consolidated results.