D C M Limited carries Rs 50 crore advance amid dispute

On September 30, 2026, DCM carried a Rs 50 crore advance from its Hisar land developer as a current liability while court appeals and arbitration remained unresolved. The treatment left standalone current liabilities Rs 42.99 crore above current assets, and the statutory auditor identified a material uncertainty related to going concern.

What happened to DCM's Hisar development agreement?

DCM terminated its Hisar joint development agreement after delays in restoring the project licence, but that termination remains under challenge. The company signed the Joint Development Agreement, or JDA, with GCD Prime on August 11, 2022, to develop 68.35 acres at Village Bir Hisar, Sector-23, Hisar, Haryana, as an affordable residential plotted colony under Deen Dayal Jan Awas Yojana-2016.

The project received Licence No. 179 of 2022 on November 10, 2022, covering 67.275 acres, but Haryana's Director General, Town and Country Planning suspended it in April 2023. DCM said the suspension followed an enquiry initiated by the Deputy Commissioner concerning its Hisar land. Under the JDA, the developer was responsible for obtaining and maintaining statutory approvals, including the development licence.

DCM issued its notice of forfeiture and termination on November 1, 2025, citing what it described as inordinate delay and continuing breaches by the developer in securing revocation of the suspension. The notice stated that the advance paid under the JDA would be forfeited 15 days after receipt and that the JDA would then terminate, revoking the developer's rights. The property is subject to a later court direction to preserve the existing position.

Why is DCM's Rs 50 crore advance still a current liability?

DCM continues to show the Rs 50 crore received from the developer as a current liability because the litigation and arbitration have not been concluded. Although DCM maintains, based on legal advice, that it has a strong arguable case for termination and forfeiture, it made no accounting adjustment pending final outcomes in the court appeals and arbitral process.

The Rs 50 crore advance accounted for most of DCM's Rs 54.17 crore of standalone current liabilities on September 30, 2026. Without a concluded forfeiture or repayment outcome, DCM retained the full advance in liabilities rather than recognising it as income or reducing the balance. The gap between current liabilities and current assets widened by Rs 1.38 crore from Rs 41.61 crore on March 31, 2026.

The accounting treatment reflects an unresolved claim rather than a confirmed gain or loss for DCM. The developer's petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking, among other relief, a stay on termination was dismissed by a Delhi High Court single judge on July 28, 2026. However, the developer appealed, DCM filed a cross-appeal, and both matters remain pending before the Division Bench.

How does the Hisar dispute affect DCM's liquidity?

The dispute places a large contested balance within DCM's near-term liabilities while standalone cash and cash equivalents stood at Rs 17 lakh on September 30, 2026. Cash and cash equivalents had declined from Rs 77 lakh on March 31, 2026, while bank balances other than cash equivalents were Rs 2.20 crore, compared with Rs 2.51 crore six months earlier.

Standalone operations used Rs 1.94 crore of cash in the six months ended September 30, 2026, compared with Rs 4.30 crore used in the corresponding 2025 period. Investing activities generated Rs 1.34 crore, including Rs 89 lakh of dividend income and Rs 31 lakh from net maturity of bank deposits. The resulting net cash decrease was Rs 60 lakh, compared with an increase of Rs 10 lakh in the prior-year six-month period.

Management said it expects to support operations through liquidity initiatives focused on real-estate assets and operations, including selling or disposing of land parcels not used in business. It also cited a plan to restructure the Engineering Business Undertaking and other interim liquidity measures. These are management plans rather than disclosed completed sales, financing transactions or restructuring approvals.

DCM reported standalone equity of Rs 1.66 crore on September 30, 2026, down from Rs 4.16 crore on March 31, 2026, after a Rs 2.50 crore pre-tax loss in the six-month period. DCM also did not recognise a deferred tax asset because it said there was uncertainty over sufficient future taxable profit to use accumulated losses and unused tax credits.

What legal and operating risks remain for DCM?

DCM faces ongoing court, arbitration and property-status restrictions in addition to the licence suspension. On August 12, 2026, the Delhi High Court Division Bench directed that status quo be maintained regarding the property forming the corpus of the JDA. Arbitration has also commenced before a sole arbitrator appointed with both parties' consent under the JDA.

The next legal outcomes could determine whether the Rs 50 crore is ultimately forfeited, remains repayable or requires another accounting treatment. DCM said it would evaluate steps for the project land after the proceedings, including seeking revocation of the suspended licence or exploring other options permitted by law. No date for a Division Bench ruling, arbitral award or licence decision was disclosed.

A separate operating matter concerns DCM's Engineering Division in Punjab, where a lockout began on October 22, 2019. The labour dispute remains sub judice, and DCM has not provided for wages of workers on its rolls for the lockout period through September 30, 2026, amounting to Rs 31.32 crore, including Rs 1.12 crore relating to the September 2026 quarter.

The statutory auditor drew attention to both the unprovided lockout wages and the Hisar-linked going-concern uncertainty. The auditor's review conclusion was not modified for either matter, but it identified the Rs 50 crore advance, the Rs 42.99 crore working-capital deficit and management's liquidity plans as a material uncertainty on going concern.

Conclusion

DCM's Hisar agreement has become a legal and liquidity issue because its Rs 50 crore developer advance remains a current liability while the project licence stays suspended and the termination is contested. The September 30, 2026 standalone balance sheet shows Rs 54.17 crore of current liabilities against Rs 11.18 crore of current assets, with the disputed advance accounting for most of that difference.

The immediate matters to watch are the Division Bench appeals, the sole-arbitrator proceedings and any action on revoking Licence No. 179 of 2022. Management has also identified possible land disposals, real-estate asset management and an Engineering Business Undertaking restructuring as liquidity measures, but it disclosed no completed transaction or timetable for those plans.