Bihar Sponge Iron Limited finds inventory discrepancies at plant

Bihar Sponge Iron Limited found in February 2026 that inventory recorded from its former operator’s representations did not match stock physically available at its plant, after the operator abandoned the site. BSIL accounted for Rs 63.81 lakh of identified inventory sold and wrote off the unavailable balance through other expenses.

What did BSIL find after the former operator left?

BSIL found substantial differences between stock at its Umesh Nagar, Chandil plant and inventory quantities previously communicated by Vanraj Steels Private Limited after the operator abruptly abandoned the premises in February 2026. The company said Vanraj Steels had exclusive possession and control of the plant before its departure.

BSIL said it could not independently conduct a physical verification during the preceding financial year because the inventory remained under the operator’s control. Its book balances were instead updated using verbal information and representations supplied by the operator, without an independent count of actual quantities at the plant.

After regaining access in February 2026, BSIL carried out a physical assessment and compared available stock with the quantities previously communicated. The company concluded that the inventory figures supplied by the operator did not accurately reflect the actual stock position, though the disclosure does not state a separate readable amount for the inventory write-off.

The operating arrangement stemmed from an agreement amended in December 2020, with operations commencing on 12 January 2022. BSIL said it has outstanding claims and recoverable dues from the VSPL Group, while claims raised against BSIL have been denied and remain subject to adjudication; the company said it is pursuing legal remedies.

How did BSIL account for the inventory discrepancy?

BSIL accounted for Rs 63.81 lakh of inventory identified and sold during the current financial year. It wrote off the balance inventory that was not physically available, classifying the charge under other expenses after assessing the stock’s availability, condition and recoverable value.

The disclosed Rs 63.81 lakh is not the value of the write-off. It is the amount at which BSIL accounted for inventory it identified and sold, while the company said the unavailable balance had no eligible realisable value and was therefore written off.

BSIL reported inventories of Rs 1.76 crore at 30 September 2026, compared with Rs 4.02 crore at 31 March 2026. The Rs 2.25 crore reduction covers all balance-sheet movements during the six months and cannot be attributed solely to the operator-related adjustment, because the company also identified and sold inventory during the financial year.

What was the effect on BSIL’s September 2026 results?

BSIL reported no revenue from operations in both the quarter and six months ended 30 September 2026 because the plant was under revamping and major maintenance. The company had entered into a Facility User Agreement with Amalgam Steel & Power Limited on 23 March 2026.

Total income for the six months was Rs 7.56 crore, comprising other income because operating revenue was nil. In the corresponding six months ended 30 September 2025, BSIL reported net revenue from operations of Rs 141.26 crore and total income of Rs 154.80 crore.

BSIL reported a loss after tax of Rs 8.26 crore for the six months ended 30 September 2026, against a profit after tax of Rs 3.86 crore a year earlier. The September 2026 quarter recorded a loss after tax of Rs 10.74 crore, compared with profit after tax of Rs 1.75 crore in the September 2025 quarter.

Other expenses rose to Rs 42.04 crore in the six months ended 30 September 2026 from Rs 8.28 crore in the corresponding period of 2025. BSIL placed the unavailable inventory write-off in other expenses, but did not provide a separate readable amount for that charge, so the filing does not quantify its contribution to the increase.

What changed in BSIL’s financial position?

BSIL reported total assets of Rs 87.88 crore at 30 September 2026, down from Rs 92.27 crore at 31 March 2026. Other equity was negative Rs 132.48 crore at the September date, compared with negative Rs 124.22 crore at the March year-end, alongside the six-month loss of Rs 8.26 crore.

Non-current borrowings were Rs 83.98 crore at 30 September 2026, marginally below Rs 84.24 crore at 31 March 2026. Current borrowings remained Rs 27.46 crore, while trade payables increased to Rs 8.79 crore from Rs 6.74 crore over the same period.

BSIL disclosed interest of Rs 123.62 crore on the Government of Jharkhand soft loan as at 30 September 2026. The company said it had provided Rs 27.46 crore in its accounts, while stating that the soft-loan principal had been fully paid and that it had approached the lender for an interest waiver.

A Rs 2.15 crore penalty recovered by South East Coalfields Limited for short lifting of coal had not been provided for, pending final settlement. BSIL said its writ petition against the South East Coalfields decision was dismissed on 27 October 2025 and that it planned to file an appeal before the High Court of Chhattisgarh.

What is BSIL doing with the plant now?

BSIL said the plant was being revamped and undergoing major maintenance under the Facility User Agreement dated 23 March 2026 with Amalgam Steel & Power Limited. The stated consequence was nil operating revenue in the September 2026 quarter and first half, and the filing gives no date for operations to resume.

BSIL’s board has also decided to install and maintain a Waste Heat Recovery Plant under the consent-to-operate approval from the Jharkhand State Pollution Board. The announcement does not disclose the installation cost, completion timetable, expected capacity effect or projected revenue impact.

The unaudited financial results for the quarter and half year ended 30 September 2026 were reviewed by the Audit Committee and approved by the board on 13 November 2026. A separate filing dated 13 November 2026 recorded Aditya Kumar Modi’s resignation as director and whole-time director, effective 1 December 2026.

Conclusion

BSIL’s inventory disclosure shows that its book records, which had relied on representations by the former operator, did not match the physical stock found after the February 2026 abandonment. The company recognised Rs 63.81 lakh from identified inventory sold, wrote off unavailable stock through other expenses, and reported no operating revenue and a Rs 8.26 crore six-month loss.

The next disclosed matters to watch are the revamp and maintenance under the 23 March 2026 Facility User Agreement, any resumption of operating revenue after the nil-revenue September half year, and BSIL’s legal efforts involving the former operator. The company also plans an appeal in the South East Coalfields matter and is seeking a waiver of interest on the Jharkhand soft loan.